2014 | 2015

The Perishable Products Export Control Board

CONTENTSCHAPTER 1: FOREWORDS 01

CHAPTER 2: GOVERNANCE AND ADMINISTRATIVE INFORMATION 09

CHAPTER 3: DIVISIONAL REPORTS 21

CHAPTER 4: FINANCIAL STATEMENTS 45

CHAPTER 5: STRATEGIC PLAN 77

CHAPTER 6: ORGANISATIONAL PERFORMANCE 93

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MINISTER'S FOREWORD 03

CHAIRPERSON'S FOREWORD 05

CHIEF EXECUTIVE OFFICER'S FOREWORD 07

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The PPECB is in a unique position to play a critical role in accelerating transformation of the perishable products sectors of our economy. The majority of black smallholder producers struggle to access markets due to failure to meet the quality standards required. It is in this area that the PPECB can utilise its expertise to ensure that such farmers meet the required product quality standards, not only for the domestic markets but also for the international markets for those that can produce the requisite volumes.

The PPECB launched its much awaited mobile technology platform, called Project Titan on 1 October 2014 and is gaining ground with the roll out thereof. The Project has the aim of empowering inspectors to carry out their duties by using a tablet device. This will take the PPECB and its customers from the clipboard and pen era into a paperless environment where real time information is a given. This smart new technology will also contribute in improving the image of agri culture and make it more appealing to the youth.

I wish to congratulate the PPECB in once again receiving an unqualified audit and on passing their ISO 9001: 2008 accreditation audit with only two minor findings. I wish the Board, the CEO and staff well for the year ahead.

SENZENI ZOKWANA

Minister of Agriculture, Forestry and Fisheries

In President Jacob Zuma's State of the Nation address on 17 June 2014, the need was emphasised to embark

on a radical socio-economic transformation to push back the triple challenges of poverty, inequality and unemployment. The need for this radical transformation was powered by the widely researched National Development Plan (NDP) that now serves as the blueprint for economic development going forward in South Africa.

I am thus pleased to note that as a national public entity, the Perishable Products Export Control Board (PPECB) is committed to supporting Government in its aim to achieve its national priorities of creating employment, promoting food security and economic growth as set out in the NDP. The PPECB also took note of the focused actions set out in the Agricultural Policy Action Plan (derived from the Integrated Growth and Development Policy for Agriculture, Forestry and Fisheries) as well as SIP11 which speaks to the infrastructure challenges. Within the confines of its mandate, the PPECB's strategic plan has been aligned with Government's imperatives and Transformation and Development was identified as a key strategic programme in the PPECB.

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MINISTER’S FOREWORD

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What must surely rate as a highlight for the period under review is the successful launch and roll-out of Project Titan, whereby inspectors are moving away from clipboards and manual processes to smarter mobile tablet technology. The tablet technology has galvanised the majority of our employees' energies into a common direction with a common goal. This project is a quantum leap for the PPECB and industry, and there is no room for any form of complacency within the organisation.

In order to execute and give impetus to our approved strategic plan and mandate, the Board has approved significant capital expenditure to overhaul the PPECB's ageing Information and Communications Technology (ICT) infrastructure and to furthermore also cope with the additional 500 tablets that will come online with the commencement of the citrus season.

The Citrus Black Spot (CBS) fungus found on South African citrus remains a cause for concern among European Union (EU) authorities.

Determining an appropriate strategy for the laboratory remains a challenge for the Board, as there are many opportunities that can be leveraged in the food safety space. The recent drought negatively impacted groundnut volumes, which severely impacted on the financial performance of the laboratory. This places the laboratory under further pressure to leverage the various opportunities available in the marketplace effectively, as significant capital invest ment is required to optimise these opportunities.

I am pleased to present the 2014/2015 Annual Report of the Perishable Products Export Control

Board (PPECB). The period under review has been challenging for the agricultural sector and the fresh produce industry at large. Notwithstanding these challenges, I am gratified to report that the PPECB has responded extremely well to the industry vagaries, and more than satisfactorily delivered on its core performance mandate.

The PPECB as a national public entity and as custodian of the country's perishable exports produce quality standards, supports Government's priorities of employment creation, promoting food security and economic growth by focusing on its core mandate and vision of enabling our customers to become the preferred suppliers of perishable products worldwide. This naturally implies a fine balance between focused inspection and cold chain services to our clients, and simultaneously driving the country's developmental and transformational agenda. All of the above priorities are pursued whilst containing our cost base to ensure that our services are delivered efficiently and cost effectively, with the requisite value creation for all stakeholders.

The focal point at the PPECB over the last three years has been on changing the corporate culture to a more customer-focused, business-oriented culture hungry to make a difference to its service delivery. I am indeed pleased to report that as a Board, we have observed the inculcation of this culture change first-hand, and it is further underscored by positive customer feedback we have received from numerous customers. Laughter is back in the corridors, and employees are treating each other - and customers - with much greater respect and urgency than before. This can still improve and as always, we must be vigilant to maintain this positive culture.

The ongoing negative environment of global economic development and political instability does not seem to be abating, and this, coupled with the prevailing local economic and social challenges, creates a demanding operating environment for the organisation. The Board has therefore resolved to focus on ensuring that key strategic operational issues are tackled through innovation, collaboration and partnership with sister entities, clients, the private sector and developmental organisations where relevant.

CHAIRPERSON'S

FOREWORD

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From a sustainability point of view, the two Acts governing the PPECB (Agricultural Products Standards Act and Perishable Products Export Control Act) to be promulgated in Parliament may give the PPECB the opportunity to move to a more risk-based inspection methodology. This is more in line with inspection agencies worldwide, as the current business model remains an unsustainable option for the future. The Bills are currently under review and we remain hopeful that they will be passed by Parliament soon.

From a governance perspective, the PPECB complies with the Public Finance Management Act (PFMA) and the relevant corporate governance provisions expected of it as a national public entity. The Board, through its oversight role, has ensured that the PPECB remains financially sustainable in a volatile agricultural economic environment. I am happy to report that for the period under review, the PPECB again received an unqualified audit report.

The PPECB transformation and developmental agenda is progressing well, and it is particularly focused on assisting resource poor farmers to get export ready, and in so doing access high value global markets. Our flagship graduate programme to train new entrants to agriculture (with particular emphasis on the youth and women) will receive further focused attention. We are currently exploring collaborative partnerships to further strengthen this initiative, and in so doing assist with efforts to transform the agricultural industry.

Finally, I would like to thank the Honourable Minister Senzeni Zokwana; Portfolio Committee on Agriculture, Forestry and Fisheries; Director General Prof. Edith Vries; the team at the Department of Agriculture, Forestry and Fisheries (DAFF) and our clients for their continued support and assistance in dealing with some interesting challenges for the period under review.

All that remains for me to do is to extend my gratitude to the staff, management and my fellow Board members at the PPECB for their commitment and drive to ensure that the PPECB delivers on its mandate in a very client-centric way.

ANGELO PETERSEN

Chairperson, the PPECB

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Looking back over the past year, the Perishable Products Export Control Board (PPECB) certainly

had its fair share of successes and challenges.

Despite the organisation having turned 89 years old this year, it has only been unionised for the past 2 years. Cultivating a stable and structured relationship with a Union is thus largely unchartered territory for the management of the PPECB and it has become evident that more investment will be required to ensure the PPECB functions and communicates effectively on Union matters.

Our innovation portfolio was given new life and impetus when we relaunched it in November 2014 as a competition called 'Eureka'. Eureka, an online submission platform, allows employees to contribute to the betterment of the organisation and stand in line to be financially rewarded for their contributions.

The organisation also decided to regain its ISO 9001: 2008 accreditation status, and did exceptionally well, passing the SABS audits with only two minor non-conformities cited.

Closure of the European Union (EU) market due to Citrus Black Spot (CBS) remains the biggest threat to the South African fruit industry, and the PPECB over the short term. About 52% of annual South African fruit and vegetable exports are destined for the EU. We are thus heavily dependent on this market, especially with regard to citrus fruit exports. The additional measures taken to ensure that products are properly inspected for CBS places additional resource constraints on the PPECB. Any export ban on the South African citrus industry will have far reaching implications for all stakeholders in the citrus value chain, foreign exchange, employment and our organisation at large. The organisation has therefore worked diligently in partnership with the Department of Agriculture, Forestry and Fisheries (DAFF) and the industry to manage the situation.

The Board has requested management to develop a future strategy for the laboratory with the input of specialist expertise and advice. At this stage, the laboratory is focusing on the recent acquisition of chemical residue analysis equipment, which tests for the maximum chemical residue levels (MRLs) permitted on exported products, particularly fresh fruits. The laboratory also attained South African National Accreditation System (SANAS) accreditation for MRL testing during the year under review.

It is now expected that the DAFF will formally appoint the PPECB laboratory as a recognised laboratory for certain MRL tests in the country.

Project Titan, the PPECB's mobile technology platform, and arguably the most strategic project in the PPECB's history, was officially launched on 1 October 2014. Aimed at eliminating the manual processes involved with quality inspections and export certification, Project Titan will see each inspector from the PPECB replace the manual clip-board and pen methodology with an Android tablet for the purpose of conducting inspections. The project is gaining traction and at the end of the fiscal year inspectors had carried out inspections at 103 pack houses using the tablet technology. We expect that the number of pack houses that will make use of the Titan system will be significant with regard to citrus fruit due to the certification benefits, especially in terms of CBS.

For a third year in a row the PPECB successfully managed to reduce its budgeted financial loss. The past year has been exceptionally challenging in terms of financial management due to the changes in the CBS inspection methods, the early and compressed table grape season, changes in procurement rules, as well as improvements in Information and Communications Technology (ICT) infrastructure and applications. Despite all this and given that inspection volumes were up, the organisation exceeded budgeted income with 1,4%, and budgeted expenditure with only 1%. Well done to the Finance team as well as the other business units on this excellent achievement.

The Board confirmed that the PPECB's strategic objectives will remain the same over the medium term but the organisation's strategic programmes have been consolidated to highlight specific focus areas. The strategy will now be driven by four clearly defined programmes; namely: Corporate Services, Operational Services, Food Safety Services and Transformation and Development. More information on these programmes is contained in our annual performance plan.

My vote of thanks goes to the PPECB staff members for their tireless efforts in ensuring compliance, to our clients for their support, and last but not least, to our colleagues at the DAFF for their support and guidance.

CYRIL JULIUS

Acting Chief Executive Officer, the PPECB

CHIEF

EXECUTIVE

OFFICER’S

FOREWORD

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BOARD AND SUB-COMMITTEES 11

MANAGEMENT COMMITTEES 13

CORPORATE GOVERNANCE REPORT 17

MATERIALITY FRAMEWORK 19

RISK MANAGEMENT 20

GOVERNANCE AND ADMINISTRATIVE INFORMATION

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Board and Sub-committees

Board Audit CommitteeHuman Resources (HR) Committee

Information and Communications Technology (ICT)

Committee

Laboratory Committee

Who appoints

members?Minister of the Department

of Agriculture, Forestry and

Fisheries (DAFF)

The PPECB Board The PPECB Board The PPECB Board The PPECB Board

Term and date

appointed

2013-16 2013-16 2013-16 2013-16 2013-16

Appointed 01/09/2013 for

three years

Appointed 01/09/2013 for

three years

Appointed 01/09/2013 for

three years

Appointed 01/09/2013 for

three years

Appointed 01/09/2013 for

three years

CompositionAll non-executives and one

ministerial representativeAll non-executives All non-executives All non-executives All non-executives

Charter - Board

approvedYes Yes Yes Yes Yes

Do members

have to declare

interests?

Yes

(Board-approved policy exists)

Yes

(Board-approved policy exists)

Yes

(Board-approved policy exists)

Yes

(Board-approved policy exists)

Yes

(Board-approved policy exists)

Key role as

detailed in

charters:

Define and ensure compliance

with the Perishable Products

Export Control Act 9 of 1983

(PPEC Act) and the Public

Finance Management Act 1 of

1999 (PFMA Act) and National

Treasury regulations

Determine strategic direction

Approve policies to achieve

the objectives of the PPEC Act

Annually approve the business

plan, strategic plan and

budget; and monitor the

organisation's performance

against these plans

Establish and oversee

the framework of risk

management, delegation and

systems of internal control

Appoint, monitor and review

the performance of the Chief

Executive Officer (CEO)

Safeguard the assets of

the PPECB

Ensure the operation of

adequate systems and

internal control processes

Examine and review financial

statements and interim

management reports

Monitor the ethical conduct

of the company and its senior

officials

Oversee the risk management

plan of the PPECB

Review the independence of

the external auditor

Make recommendations on

the reappointment of the

external auditor

Monitor and supervise the

performance of the internal

auditors

Act in accordance with

the requirements set out

in the PFMA and Treasury

Regulations

Make recommendations to

the Board on the philosophy

and policies regarding

remuneration practices

Make recommendations to

the Board on human resource

management policies

Report to the Board on staff

development, capacity, and

organisational structure

requirements

Monitor the implementation

of employment equity targets

and Management's action

plans to achieve these

Make recommendations to the

Board on the remuneration of

the Board and sub-committees

Monitor compliance with

relevant employment and

labour legislation

Make recommendations to

the Board on the current and

future technology direction

for the PPECB

Review and assess the

financial investment in

technology to give effect to

the future strategic direction

for technology within the

PPECB

Monitor the effectiveness of

disaster recovery plans and

disaster recovery testing

Monitor and ensure the

PPECB's compliance with laws

and regulations relating to its

ICT activities

Monitor the key technology

risks and technology risk

mitigation strategies,

including the overall

technology risk profile

of the PPECB

Assess and advise on the

emerging global technologies

and trends, and their potential

for application within

the PPECB

Oversee and advise the

Board on PPECB Laboratory

requirements as proposed by

Management, and to facilitate

decision-making by the Board

Make recommendations to

the Board on the current and

future laboratory services

direction for the PPECB (e.g.

commercial and statutory

business)

Assess and advise on the

emerging global technologies

and trends, and their potential

for application within

the PPECB

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Board Audit CommitteeHuman Resources (HR) Committee

Information and Communications Technology (ICT)

Committee

Laboratory Committee

Members of the

Board Refer to page 15 for full

disclosure

2013-16 2013-16 2013-16 2013-16

A Rabe (Chairperson),

C Engelbrecht,

D Westcott

J Atwood-Palm (Chairperson),

A Petersen, L KuttaW Steenkamp (Chairperson)

E Scholtz (Chairperson),

M Mashaba

Number of

meetings

required to be

held per charter

4 2 2 2 2

Number of

meetings held4 4 4 2 2

Other permanent

invitees

General Management

Committee (GENCO)

Chief Executive Officer

(CEO), Chief Financial Officer

(CFO), General Manager (GM):

Corporate Affairs, Auditor

General representative,

External Auditors and Internal

Auditors (with unrestricted

access to Chairperson of

the Committee)

CEO, GM: Human Resources,

GMs: Statutory Operations

CEO, GM: Information and

Communications Technology

CEO, GM: Corporate Affairs,

GM: Laboratory Services

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Management Committees

General Management Committee (GENCO) Risk Management Committee (RISCO)

Who appoints members?

Chief Executive Officer (CEO) CEO

Term and date appointed

No term Appointed 01/04/2013 for a minimum of two years

CompositionCEO, Chief Financial Officer and other departmental General Managers. Refer to page 16 for detail

8 members of management

Charter - Board approved

Yes Yes

Do members have to declare interests?

Yes Yes, via the Employee Declaration of Interest Policy

Key role as detailed in charters:

Supporting the CEO (Board and also the PPECB accounting officer) in day-to-day management through a formal delegation of authority, which include but is not limited to:

» Developing PPECB strategy, business plans and budgets for approval by the Board

» Appointing a suitably qualified management team and establishing an organisational structure necessary to support the CEO in executing the PPECB's strategy

» Monitoring and reporting to the Board on the performance of the PPECB against its strategic objectives

» Setting the tone for ethical conduct by ethically leading the PPECB's staff and its Management

» Ensuring that the PPECB complies with relevant laws, legislation and governance principles

» Providing the Board with corporate governance, guidance and support

» Ensuring the Board is given the necessary information to perform its duties

» Managing and ensuring that staff conform to the values, objectives and policies of the PPECB, through effective leadership

» Ensuring that proper systems of control are established and maintained

Supporting the CEO and the GENCO in reviewing the effectiveness of the PPECB's risk management systems, practices, and procedures in accordance with policies approved by the Board

Ensuring that risks are identified, evaluated, effectively managed and, where practical, quantified

Fulfilling the risk management and control responsibilities

Preparing reports for the GENCO for consideration and approval by the Audit Committee and the Board;

Advising the Board, via the GENCO, on mitigating strategies for identified risks, and monitoring such strategies

Number of meetings to be held per charter

Regularly Quarterly

Number of meetings held

8 3

Other permanent invitees

SecretarySecretary Financial Systems and Compliance Auditor

14

Board and Sub-committee Meetings: Summary of Attendance

Member Board Audit Committee Meeting

HR Committee Meeting

ICT Committee Meeting

Laboratory Committee

Meeting

Meetings held 4 4 4 4 4

Number of meetings attended/ total number of meetings held whilst a member of the Board

Number of meetings attended/ total number of meetings held whilst a member of the Audit Committee

Number of meetings attended/ total number of meetings held whilst a member of the HR Committee

Number of meetings attended/ total number of meetings held whilst a member of the ICT Committee

Number of meetings attended/ total number of meetings held whilst a member of the Laboratory Committee

A Petersen1 4/4 N/A 4/4 N/A N/A

M Mashaba2 4/4 N/A 4/4 N/A 4/4

A Rabe3 3/4 3/4 N/A N/A N/A

J Atwood-Palm4 4/4 N/A 3/4 N/A N/A

C Engelbrecht 4/4 4/4 N/A N/A N/A

L Kutta 4/4 N/A 4/4 N/A N/A

W Steenkamp 4/4 N/A N/A 4/4 N/A

E Scholtz 4/4 N/A N/A N/A 4/4

T Reddell 3/4 N/A N/A 3/4 N/A

D Westcott 4/4 4/4 N/A N/A N/A

1 Chairperson of the Board

2 Vice-Chairperson of the Board

3 Chairperson of the Audit Committee

4 Chairperson of the Human Resources Committee

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THE PPECB BOARD

From left to right: Eurica Scholtz, Anton Rabe, Jill Atwood-Palm, Mono Mashaba, Angelo Petersen, Luyanda Kutta, Donald Westcott, Christina Engelbrecht, William Steenkamp

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THE GENERAL MANAGEMENTCOMMITTEE (GENCO)

From left to right: Pinki Luwaca, Johan Schwiebus, Dharmarai Naicker, Cyril Julius, Sarel van Wyk, Sinovuyo Matai, Lucien Jansen. Absent: Nkosana Mbokane 16

The following report sets out the corporate governance framework adopted by the PPECB

Board (the Board), and highlights the key activities for the year under review.

The corporate governance framework enables the Board to:

» Fulfil its role and discharge its duties and responsibilities as required by legislation and the regulatory environment in which the PPECB operates

» Contribute to servicing the PPECB's customers in a professional manner

» Decide on the PPECB's policy and strategic direction

» Set the parameters for delegating authority in the organisation

» Oversee risk management and internal controls at the PPECB

An essential characteristic of the PPECB's culture is its compliance with applicable legislation, including relevant Acts, regulations, standards, protocols and codes. The PPECB's key enabling legislation are: The Perishable Products Export Control Act 9 of 1983 (PPEC Act); the Agricultural Product Standards Act 119 of 1990 (APS Act); and the Public Finance Management Act 1 of 1999 (PFMA). Both the PPEC Act and APS Act are under review.

The Board's approach to corporate governance is based on the fact that sound governance is essential to creating a sustainable business.

The PPECB's Board of Directors and its

Sub-committees

The PPECB Board is structured in accordance with the PPEC Act. The Board members are appointed by, and accountable to, the Minister of the Department of Agriculture, Forestry and Fisheries (DAFF). The Board comprises non-executive directors, representing industries in which the PPECB operates.

To discharge its duties more effectively, the Board has approved and delegated authority on specific matters to various committees: Audit Committee, Human Resources (HR) Committee, Information and Communications Technology (ICT) Committee and the Laboratory Committee. These committees serve under written and approved charters, which are reviewed and updated annually. The chairpersons of these sub-committees are responsible for relaying all proposals agreed by the sub-committees to the Board for approval or otherwise.

Notices, agendas and documentation pertaining to the Board and sub-committee meetings are distributed well in advance. Minutes of all meetings are taken, and are approved at the first and subsequent meetings. Where necessary, decisions can be taken between these meetings by round robin resolutions via e-mail. All documented minutes and resolutions are stored either in fireproof safes at the PPECB, or at off-site storage facilities.

Chairperson

The Board appoints the chairperson who is responsible for the effective functioning of the Board. The chair-person's primary duties are to:

» Provide overall leadership to the Board

» Preside over Board meetings; ensure that meetings function smoothly; and that conflicts of interest are managed

» Ensure that the Board members receive professional advice when needed

» Serve as an informal link between the Board members and the General Management Committee (GENCO) and to provide support and advice, while respecting executive responsibility

» Serve as the link between the PPECB Board and the Minister of the DAFF

» Ensure that regular and objective appraisals are administered to assess the Board's effectiveness

» Assist with the formulation of the Board's Annual Work Plan, and to ensure that it is strictly adhered to

Internal Controls

Internal controls are designed to provide reasonable assurance that organisational objectives will be achieved. While the Board is ultimately responsible for the internal controls at the PPECB, this function is delegated to the GENCO to ensure that business risks, in particular, are properly managed. The Board relies on the Audit Committee and the Risk Management Committee (RISCO) to monitor and report on the status of internal controls at the PPECB.

Internal and External Audit Function

Outsourced to Rhoda Chartered Accountants, the PPECB's internal audit function provides the Audit Committee and the GENCO with reasonable assurance that one or more of the objectives are achieved in the following areas:

CORPORATE

GOVERNANCE

REPORT

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» Efficiency of operations

» Reliability of financial reporting

» Compliance with laws and regulations

The external audit function was performed by Sizwe Ntsaluba Gobodo. As required by law, the company's external auditor is responsible for independently auditing and reporting on the PPECB's financial statements. This reporting is done in accordance with South African Statements of Generally Recognised Accounting Practice (GRAP).

Business Conduct

The PPECB has adopted a code of conduct, which was approved by the Board. The GENCO and RISCO monitor compliance with this code at all times. The PPECB has also set up an independently managed fraud and ethics hotline to create awareness and monitor potentially unethical employee behaviour. In addition, the GENCO accepts its responsibility to address matters of significant concern for all stake-holders, taking into account the greater demand for accountability.

The Agricultural Portfolio Committee

The Agricultural Portfolio Committee for Agriculture, Forestry and Fisheries meets with the PPECB in Parliament twice a year. The chairperson, the vice-chairperson and the GENCO represent the PPECB at these meetings.

The PPECB's strategic plan and budget for the following year is tabled at the April meeting, and its financial results and Annual Report for the preceding year are tabled at the September meeting. The oversight role that the Agricultural Portfolio Committee plays forms part of the PPECB's overall governance.

The Management Committee (MANCO)

The MANCO is made up of the Chief Executive Officer (CEO), GENCO, regional operations managers, and other managers. The MANCO meets at least twice a year, and its chief role is to support the CEO in the PPECB's operational management. While the MANCO does not have any specific authority delegated to it, it remains an important middle-management forum that contributes towards decision-making in the organisation.

Administration and Legal Requirements

All legal, company secretarial and corporate governance matters are dealt with by the in-house Legal and Corporate Governance Advisor. The PPECB has contracted Ms Gaby Gess, an attorney, to assist the in-house legal advisor with, particularly, the rewriting of the PPEC Act, and other matters as required.

The PPECB has over 400 written policies and procedures supporting the management and staff in the day-to-day functioning of the business. Organisational policies are approved by the PPECB Board, and operational policies are approved by the GENCO. Organisational procedures are approved by the Board and operational procedures are approved by the GENCO.

EFFICIENCY OF

OPERATIONS

Materiality Framework

For the purpose of interpreting and complying with the Public Finance Management Act (PFMA), the following framework of acceptable levels of materiality and significance were applied during the 2014/15 financial year:

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(1) (c)

(2)

(b)

(c)

(d)

(e)

(a)

(b)

(i)

(ii)

(iii)

(iv)

(v)

(2)

PFMA Section Quantitative (Amount) Qualitative (Nature)

Section 50 - Fiduciary duties of accounting authorities

The accounting authority for a public entity must; on request, disclose to the executive authority responsible for that public entity or the legislature to which the public entity is accountable, all material facts, including those reasonably discoverable, which in any way may influence the decisions or actions of the executive authority or that legislature.

Any fact discovered, of which the amount exceeds the materiality figure of 0,5% of the annual gross operational expenditure of previous year's audited financial results, must be disclosed

» Any item or event of which specific disclosure is required by legislation, King Report III or GAAP

» Any fact discovered of which its omission or misstatement, in the Board's opinion, could influence the decisions or actions of the executive authority or legislature

Section 54 - Information to be submitted by accounting authorities

Before a public entity concludes any of the following transactions, the accounting authority for the public entity must promptly and in writing inform the relevant treasury of the transaction and submit relevant particulars of the transaction to its executive authority for approval of the transaction:

» participation in a significant partnership, trust, unincorporated joint venture or similar arrangement

» acquisition or disposal of a significant shareholding in a company

» acquisition or disposal of a significant asset

» commencement or cessation of a significant business activity

» Acquisition or disposal of a significant asset

» Acquisition where market value is greater than materiality figure

» Disposal where market value is greater than 50% of materiality figure

» Any participation outside of the approved strategic plan and budget

» Any acquisition or disposal of any asset that would increase or decrease the overall operational functions of the Board, outside of the approved strategic plan and budget

» Disposal of the major part of the assets of the Board

» Any business activity that would increase or decrease the overall operational functions of the Board, outside of the approved strategic plan and budget

PFMA Section Quantitative (Amount) Qualitative (Nature)

Section 55 - Annual report and financial statements

The annual report and financial statements referred to in subsection (1)(d) must:

» fairly present the state of affairs of the public entity, its business, its financial results, its performance against predetermined objectives and its financial position as at the end of the financial year concerned

» include particulars of:

- any material losses through criminal conduct and any irregular expenditure and fruitless and wasteful expenditure that occurred during the financial year;

- any criminal or disciplinary steps taken as a consequence of such losses or irregular expenditure or fruitless and wasteful expenditure;

- any losses recovered or written off;

- any financial assistance received from the state and commitments made by the state on its behalf; and

- any other matters that may be prescribed

» Any losses identified through criminal conduct

» Losses through any expenditure where the combined total exceeds the planning materiality figure after consultation with the Audit Committee for the year under review

» Any irregular, fruitless and wasteful expenditure as defined by the PFMA will be reported

Any identified loss through criminal, reckless or negligent conduct

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Risk Management

The PPECB needs to manage an array of risks that present themselves to the organisation every year. Some are predictable, while others cannot be foreseen. For this reason, the PPECB has developed policies, committees and overall management structures to monitor that risks do not place the organisation in jeopardy.

The Board has primary responsibility for assessing and managing risk across the PPECB and ensures that risk management systems and processes are effective. The Board considers the risk management process in all material aspects to be effective.

The following table summarises the top risks as at the end of the financial year:

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PFMA Section Quantitative (Amount) Qualitative (Nature)

Section 66 - (1) Restrictions on borrowing, guarantees and other commitments

R0 This public entity may not borrow money, nor issue a guarantee, indemnity or security, nor enter into any other transaction that binds or may bind the institution to any future financial commitment unless acting through the relevant executive authority (PFMA section 66(3)(c))

TOP RISKS

Insufficient Information Technology (IT) infrastructure

Current controls:

1. Old servers were replaced by new virtual servers

2. The server/back-end infrastructure was upgraded to reduce system downtime

3. The Board appointed a consultant to conduct an independent review of Information and Communications Technology (ICT) infrastructure and solutions to introduce mobile technology and use IT to support the business in better achieving its objectives

4. Monitoring and reporting on the performance of IT infrastructure on a monthly basis

5. Access point network (APN) has been introduced

Insufficient IT disaster recovery

Current controls:

1. Off-site data backups

Integrity of the export certificate

Current controls:

1. Agricultural Product Standards Act 119 of 1990 (APS Act)

2. Standard operating procedure (SOP)

3. Internal audits are conducted

4. Dispensation has been granted to retain the current SOP

5. Resources have been increased

Inability to appropriately roll out mobile technology milestones

Current controls:

1. ICT assessment underway to assess the scope of implementing hand-held devices. This includes device support

Outdated inspection methodology

Current controls:

1. The Board decides on implementation of mandate and funding priorities

2. The Board and CEO engage with the Department of Agriculture, Forestry and Fisheries (DAFF) at a policy level regarding constraints

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STATUTORY OPERATIONS 23

CORPORATE AFFAIRS 33

HUMAN RESOURCES 35

LABORATORY SERVICES 37

INFORMATION AND COMMUNICATIONS TECHNOLOGY 39

CHIEF FINANCIAL OFFICER'S REPORT 41

AUDIT COMMITTEE STATEMENT OF RESPONSIBILITY 43

DIVISIONAL REPORTS

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Introduction

Statutory Operations at the Perishable Products Export Control Board (PPECB) is comprised of the North, South and Coastal Divisions.

The PPECB's South Division comprises of the Northern Cape (Lower Orange River area) and Western Cape, which includes the following regions: Paarl, Ceres, Grabouw, Robertson and Citrusdal. The South Division is a natural deciduous grouping that contains 85% of all pome fruit, 93% of all table grapes, 93% of all stone fruit, all canned fruit, all dried fruit and all rooibos tea.

The North Division comprises of the Northern Cape (Kimberley and Hartswater), Gauteng, Mpumalanga (Nelspruit Office, including Maputo) and Limpopo (Tzaneen Office). The North Division is a natural grouping that contains 99% of all groundnuts, 13% of all maize products, 95% of all subtropical fruit, and 50% of all citrus products.

The Coastal Division comprises of the Durban region, Port Elizabeth (PE) region (including Langkloof and East London), and the Cape Town Port. The Coastal Division is a natural grouping for all cold chain services, excluding inland cold chain that contains 87% of all maize products and 30% of all citrus products.

Cold Chain

A collaborative approach with the Citrus Growers Association (CGA) and Transnet Port Terminals has given birth to the Reefer Container Operations Forum within PE and Durban. The forum was instrumental in improving logistical efficiencies and effective communication within the industry.

Perishable exports in refrigerated containers continue to steadily increase. Additional cold storage facilities were commissioned within inland areas, thus increasing cold chain activities in the production regions. The challenges experienced with this shift were highly visible during this financial year due to higher volumes of containers being loaded within inland areas. The PPECB was required to align their cold chain operations and resources with these environmental changes.

There has been continued growth in cold treatment volumes through all South African ports. Significant growth of containers shipped to China, South Korea, Thailand and Nigeria was recorded during the period under review. The Coastal Division saw the loading of 5 206 cold treatment containers. This is a 14% increase in containers compared to the previous financial year. The inland activity points within the South Division loaded a total of 3 163 cold treatment containers, compared to 2 825 during the previous financial year.

The regions deployed resources to cold treatment programmes and provided training in order to ensure that personnel are competent on cold treatment activities. The PPECB has fostered a culture of continuous improvement within the value chain in an effort to minimise risk and improve operational efficiencies.

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STATUTORY

OPERATIONS

Cyril Julius General Manager: Coastal

Sinovuyo Matai General Manager: North

Sarel van Wyk General Manager: South

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Vessel Survey

TOTAL INSPECTED

TOTAL REJECTED

% REJECTED REASONS FOR REJECTIONS

76 13 17%Insufficient pre-cooling hours, structural damages in the cargo hold, taint and unhygienic conditions

National Container Inspection

TOTAL INSPECTED

TOTAL PASSED

REJECTED % REJECTED REASONS FOR REJECTIONS

298,402 275,875 22,527 7,5% Dirty, taint, damaged panels, oxidation

National Cold Storage Inspection

REJECTED % REJECTED REASONS FOR REJECTIONS

24 5% Dirty, damaged panels, faulty temperature recording equipment

National RRMT Inspected

REJECTED % REJECTED REASONS FOR REJECTIONS

43 11% Taint, faulty refrigeration units, damaged panels

National Containers Loaded All Products

2014/2015

Grand Total 127,107

National Containers Fully Monitored (Green Tagged)

TOTAL NO. OF CONTAINERS CONTAINERS GREEN TAGGED % GREEN TAGGED

127,107 110,583 87%

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Certification

During the previous financial year, the PPECB took full control of the export certification process. This means that all certificates are to be processed and printed by the PPECB and addendums must be verified against copies of the original consignment notes. We have successfully implemented the certification process in all our offices and have managed to process certificates well within 24 hours of submission. In order to improve the turnaround time on certificates even further, Service Level Agreements (SLA's) have been entered into with four forwarding agents in the South Division to place four retirees at their sites to verify addendums. This resulted in mistakes being immediately addressed on site instead of being returned to the Cape Town Airport Office.

During the 2014/2015 financial year, the certification desks processed 98,322 export certificates nationally, an increase of 8,4% compared to the previous fiscal year. These certificates represent more than 250 million cartons (+2,4% on budget) and 238 million kilograms (+1,2%) of vegetables, flowers, canned products, dried fruit, rooibos tea and other products. 7,612 certificates (+1,1% on previous year) were identified with mistakes and had to be re-issued. 8,686 certificates (-13,6%) were cancelled for various reasons. In total, 16,6% of all certificates were cancelled and identified with mistakes.

MRL Sampling

The PPECB assisted the Department of Agriculture, Forestry and Fisheries (DAFF) in drawing product samples to determine the maximum residue levels (MRLs) on all exported products.

12,164 samples (+12,9%) compared to budgeted volumes were analysed in DAFF's Stellenbosch laboratory. Corrective actions were applied wherever an excessive residue of chemicals was detected on the product.

Export Volumes

Bullish year-on-year export volume performances were recorded in table grapes (+7,0%), avocados (+26,2%) and citrus (+1,6%). In the 'other products' category, the total weight (in kilograms) exported consisted of vegetables (+37,2%), dried fruit (+22%) and rooibos tea (5,7%).

Inspection Services

During September 2014, the European Commission Food and Veterinary Office visited South Africa to audit the export certification and inspection processes. Three PPECB regions were audited on pome fruit and table grapes and zero findings were raised.

Despite the overlap of the seasons and the unexpected drastic increase in service needs, the PPECB still managed 95% compliance to 2% sampling required by the statutory mandate.

The amended regulations for Botswana, Namibia, Lesotho, Swaziland (BNLS) resulted in countries that were previously exempted from inspection, now having to be inspected. In order to accommodate inspections for exports to BNLS countries four additional inspectors had to be appointed.

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Grape Exports 2014/2015

Table Grapes

It is the first time in 9 years that all the grape production regions started packing before the New Year. The season in the Lower Orange River started 7 days earlier than last year, while the Berg River began 18 days and Hex River 14 days earlier than last year. This resulted in larger volumes for both inspections and shipments compared to last year. The actual volumes inspected were 62,3 million cartons, which is 7% above the budgeted volume of 58,2 million cartons nationally. Hail damage in the vicinity of Onseepkans in the Lower Orange River area resulted in a loss of 1 million cartons. Export desti nations were primarily northern Europe (58%), the United Kingdom (UK) (24%), and Asia (9%).

European Union58%

24%

9%

5%

2%

2%

United Kingdom

Asia

Middle East

Other

Russian Federation

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Pome Fruit

The actual volume inspected was 41,9 million cartons, representing -5,3% below budgeted volumes of 44,2 million cartons nationally. The volume of pome inspected was below budgeted volumes due to hail damage experienced in the Ceres area in November 2013.

The new season (2015) started 10 to 14 days earlier than last year, and summer pears started in Ceres in December 2014. It seems that the early season resulted in smaller than usual fruit. The current risk is that exports to oil producing countries such as Russia, Nigeria and Angola might be seriously affected due to a sharp reduction in income. Market access for apple exports to China was obtained, and producers are waiting to determine the impact on exports. The first apples were exported to China from the Ceres area during March 2015.

Apples were primarily exported to the UK (23%), the Far East (26%), Africa (31%) and the European Union (EU) (7%), while the EU (45%) had the biggest demand for pears, followed by the Far East (16%), Middle East (15%) and the UK (9%).

Pome Exports 2014/2015

Asia22%

21% European Union

20% Africa

18% United Kingdom

3% Indian Ocean Islands

11% Middle East

1% North America

4% Russian Federation

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Stone Fruit

The stone fruit season started earlier than ever recorded, with the inspection of the first nectarines on 3 October 2014. As the season started 7 to 10 days earlier than the previous year, increased volumes were recorded at the start of the season for both inspections and shipments. However, overall volume inspected was 16,8 million cartons, which is -4,3% below budgeted volumes of 17,6 million cartons nationally. The plum crop is 8% higher than last season and the fruit size is one size smaller. Sales were slow and prices were under pressure, which resulted in supermarkets cancelling programmes.

Plums were mainly exported to the EU (47%), the UK (22%), and the Middle East (20%), while peaches and nectarines were primarily exported to the UK (51%), the Middle East (25%) and the EU (18%).

Stone Exports 2014/2015

European Union39%

28% United Kingdom

23% Middle East

6% Asia

4% Other

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Citrus

Despite international challenges and competitiveness, South African citrus showed an increase of 2% in fruit inspected against the previous year. A total of 115,6 million cartons of citrus were inspected during the 2014/2015 fiscal year compared to 111,8 million cartons during the previous year. Grapefruit inspection showed a decline by 13% from the previous year. Lemons and soft citrus inspections showed a significant increase compared to 29% and 24% respectively in the previous year.

The threshold of five Citrus Black Spot (CBS) interceptions imposed by the EU remained during the year under review. International interceptions for CBS totalled 28 during 2014, compared to 35 during the 2013 season. Although there was a reduction of interceptions compared to the previous season, the interceptions reported were significantly higher than the threshold. South Africa strategically volunteered to exit the EU market after the 28th CBS notification. Stricter risk management systems were discussed in an effort to reduce future CBS interceptions.

The ISPM 15 wood packaging regulations were in the spotlight in the United States of America (USA) market. This was due to shipments of citrus being rejected as a result of insect infestation in wooden pallet bases. Consequently, the South African wood packaging industry was under scrutiny with regards to their compliance with the regulations. The change to plastic pallets in the USA trade has come with its own set of unique challenges, both locally and within the USA. More stringent compliance measures were swiftly implemented by the South African industry.

National Citrus Inspection Volumes in Cartons

Citrus Type 2013/2014 2014/2015 Deviation

ORANGES 75,506,091 75,590,756 0%

LEMONS 10,740,032 13,855,997 29%

GRAPEFRUIT 15,107,229 13,194,602 -13%

SOFT CITRUS 10,484,878 13,001,064 24%

Grand Total 111,838,230 115,642,419 3%

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Citrus Inspections 2014/2015

Oranges65%

12% Lemons

12% Grapefruit

11% Soft citrus

National Citrus Load Port Distribution in Pallets

Destinations 2013/2014 2014/2015 Deviation

EUROPEAN UNION 512,116 444,439 -13,00

MIDDLE EAST 298,363 311,141 4,00

ASIA 229,608 289,141 26,00

RUSSIAN FEDERATION 180,876 169,972 -6,00

UNITED KINGDOM 141,981 135,648 -4,00

NORTH AMERICA 92,152 99,025 7,00

AFRICA 8,869 9,701 9,00

INDIAN OCEAN ISLANDS 8,220 8,863 8,00

SOUTH AMERICA - 20 -

Grand Total 1,472,184 1,467,951 -

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Citrus Load Port Distribution (Pallets)

Load Port 2013/2014 2014/2015 Deviation

DURBAN 834,164 788,431 -5%

CAPE TOWN 261,691 297,807 14%

PORT ELIZABETH 185,888 234,065 26%

NGQURA (COEGA) 150,385 144,288 -4%

MAPUTO 40,056 3,360 -91%

Grand Total 1,472,184 1,467,951

Grain

The PPECB inspected a total of 14,399,674 tons of grain. This was a 1,3% increase in inspected tonnage compared to the previous financial year. However, during the latter part of the grain season, the international grain demand declined and the prices abroad were under immense pressure. These factors resulted in low volumes of grain exported during the late season. Unplanned grain exports pose a great challenge as the PPECB strives for efficient and effective service delivery.

Durban53.8%

20% Cape Town

16% Ngqura (Coega)

10% Port Elizabeth

0.2% Maputo

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Avocados

The 2014/2015 financial year was a bumper crop season for avocados. The total volume inspected for the season was 14,5 million cartons. The high volume was ascribed to favourable growing conditions, as well as the market conditions. Also, new orchards came into production, thus increasing the volumes. In terms of the destination markets, 80% of the fruit went to the EU, 17% to the UK; while Russia, the Middle East and Asia received 1% each.

Litchis

The 2014/2015 litchi crop did not do as well as expected, and only 2,45 million kilograms of fruit was inspected. The lower than expected crop was due to the fact that the growing season was drier than expected.

Mangos

The mango crop for the 2014/2015 year is the highest in the last few years. The total volume inspected for the season was 776,106 cartons compared to 488,593 cartons in the previous season. This increase is attributed to excellent internal quality, and an increase in demand from the importing market. The bulk of the exports went to the African market, specifically Ghana, with a smaller volume going to the Middle East.

Groundnuts

Groundnut production increased compared to the previous year, in which a drought was experienced. For the 2014/2015 season, 13,6 tonnes of groundnuts were inspected for export. This represents an increase of over 50% compared to last year. More of the crop was however available for exporting, but fewer contracts were signed in the previous season. The EU and Japan made up the bulk of the importing regions.

Other Vegetables

Vegetable inspections for the 2014/2015 financial year saw an increase in volumes. The total inspected volume was 111,734 tonnes compared to the 110,365 tonnes in the last season. This is comprised of 45,877 tonnes of onions; 44,015 tonnes of potatoes; and 21,843 tonnes of other vegetables of which 503 tonnes was mini vegetables.

The target market for onions and potatoes was mostly African countries via road transport. The mini vegetables (which include baby carrots, baby marrow, baby cabbage and patty pans) were mainly sent to the EU via air freight.

Staff Matters

The Board approved the appointment of 34 fixed-term contract workers to address staff shortages and contract workers were appointed for longer periods. The citrus season for 2014 started off with 17 crucial vacancies, but through effective planning, cooperation, prioritisation and risk management timeous service delivery was ensured. All activity points were manned and statutory functions were executed accordingly. The PPECB staff in the inspection services spent a total of 17,188 days on relief duty, and travelled approximately 3,403,087 kilometres, to ensure that services were delivered timeously and in accordance with the stakeholders' needs.

Avocado Exports 2014/2015

EU80%

17% UK

1% Russia

1% Asia

1% Middle East

The year under review was once again full of excitement and

reward for the Corporate Affairs Division. Operating as a cross-functional resource to the

organisation, the division has consolidated efforts in ensuring that the PPECB remains on course to achieve its organisational objectives.

As the PPECB's custodian for strategic planning and organisational performance, the Corporate Affairs Division has successfully facilitated the formulation and timely submission of the 2015-2020 organisational strategic plan. For the 2014/2015 fiscal year, the PPECB has managed to achieve an 83% performance rating in terms of the organisational targets set for that period.

Legal and Corporate Governance

The Legal and Corporate Governance unit has continued to work on its objective of ensuring compliance with relevant legislation and governance principles. The unit conducted a self-assessment to measure the organisation's application of the King III principles, and received an AA (excellent) rating. The unit has further embarked on a process to evaluate the Board and Executive Management team's performance. It conducted a self-assessment with the assistance of an external service provider, which yielded an above satisfactory rating.

The PPECB has provided additional input to the Perishable Product Export Control Bill that is currently under review. The Bill is still in process, and the PPECB remains hopeful that the Bill will be circulated for public comment during 2015. During the year under review, one Board member (Mr Tim Reddell) representing the marine industry, resigned. The replacement process has been initiated, and a new Board member will be appointed early in the 2015/2016 fiscal year.

A total of four legal and/or corporate governance incidences have been reported and addressed during the year under review.

Marketing and Communications

In an effort to strengthen the PPECB brand and ensure brand consistency, the Marketing and Communications unit has completed the refinement of the PPECB logo. The refreshed logo was rolled out across the country, and marketing collateral was updated accordingly. In line with the refreshed brand, a new company information booklet and corporate video was introduced, along with branded corporate gear for all PPECB employees.

The unit ensured the PPECB's presence at 10 industry events, of which two were international events. These international events (Fruit Logistica Berlin and Asia Fruit Logistica in Hong Kong) provided an ideal platform to highlight the critical role that the PPECB fulfils in the export value chain. The unit also launched the PPECB's "Chip in for Charity" golf day. The event raised an amount of R20,000, which was donated to Umtha Welanga Educare Centre in Paarl. Going forward, the charity golf day will become an annual event on the PPECB's calendar.

Business Certifications

As an independent quality assurance organisation servicing the perishable product export industry, the PPECB plays a pivotal role in promoting the credibility of the South African export value chain. The organisation has therefore opted to obtain an ISO 9001:2008 accreditation.

During the year under review, the PPECB made significant progress in achieving this goal, and has undergone a stage 1 and 2 audit with minimal non- conformances raised. In preparation for the audit, the PPECB revised all relevant policies and procedures, and introduced a web-based business management system, among other things. Once the findings raised have been closed-out successfully, the PPECB will be awarded an ISO 9001:2008 accreditation.

The PPECB's B-BBEE status was also reviewed, and the organisation was verified as a level 6 contributor.

Development

The PPECB continued with its efforts to uplift smallholder farmers during 2014/2015. Development initiatives are predominantly conducted in collaboration with other government entities and departments, including the Department of Agriculture, Forestry and Fisheries (DAFF), the Agricultural Research Council (ARC), and the Western Cape Department of Agri culture. Initiatives hinged on the PPECB's core competencies, which include food safety, product inspection and cold chain management.

To this end, the PPECB has trained 175 smallholder farmers across South Africa. The unit further raised R2,6 million for this purpose, and has already secured R500,000 per year for the next five years. Assistance was, however, not only limited to the up-skilling of small holder farmers, but partnerships were also strengthened with two local fresh produce markets.

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Food Safety

In addition to the PPECB's objective to conduct product inspections and cold chain management services, the organisation is also mandated in terms of Regulation 707 to ensure food safety compliance for the perishable product export industry. The PPECB Food Safety unit conducted 470 food safety compliance audits, representing a 10% increase compared to the previous fiscal year. The increase in audits is mainly due to additional audits conducted on grain silos, groundnuts, rooibos tea and dried fruit.

The unit has further continued with the unannounced food safety audits, and conducted 150 audits out of 2,000 registered puc's. The unit has expanded on its checklists for field packing, and has consequently facilitated a project to investigate orchard packing of pome fruit. This project is set to be completed in 2015, with definite benefits to the industry.

Harmonisation

The Harmonisation unit continued with its efforts to support the organisational objectives by ensuring the uniform and consistent application of standards amongst about 350 technical personnel employed by the PPECB.

During the year under review, the unit facilitated a total of eight national workshops, and more than 50 regional workshops relating to the application and interpretation of standards.

The unit further continued to work at influencing international policy in conjunction with the Department of Agriculture, Forestry and Fisheries (DAFF). To this end, the Harmonisation unit represented the PPECB at three international policy meetings hosted by the Organization for Economic Cooperation and Development (OECD) and the United Nations Economic Commission for Europe (UNECE). The unit was also instrumental in influencing bilateral agreements from a cold chain management perspective, and attended four market access meetings during the 2014/2015 fiscal year.

The unit concluded the PPECB's exchange programme with the Kwaliteits Controlle Bureau (KCB) from the Netherlands, and has entered into an agreement with Turkey for a similar programme.

During the year under review, the Harmonisation unit also undertook the role of standardising the training methodologies for the operational units. The unit has developed two standardised training manuals, and conducted six accelerated skills transfer interventions to assist about 100 beneficiaries.

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Lucien Jansen General Manager: Corporate Affairs

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Introduction

The focus of the Human Resources Division has been to ensure delivery on the strategic objectives that

we set in the previous financial year. We are proud to announce that 99% of these have been achieved.

Employee Engagement

The Perishable Products Export Control Board (PPECB) strives to create a high-engagement culture, hence the launch of the "Let's Talk" process. This process has been immensely successful and the change it has brought about is still felt and seen amongst employees. The programme provides a platform for employees to suggest topics for discussion, openly engage on challenges faced, and to recommend areas for improvement.

Employee Wellness

The employee wellness programme's utilisation for 2014/2015 has decreased by 4,44% to 10,40%, compared to 14,88% in the previous financial year. This is attributed to the fact that the organisation promotes a culture of dialogue, which provides employees with a space to talk about their concerns.

Employee Relations

The Food and Allied Workers Union (FAWU) was de-recognised as a union due to a decline in its membership to below the 30% threshold. Solidarity was subsequently recognised as a union in the PPECB.

Employment Equity

Sound progress is being made on the PPECB's employment equity profile. Representation of the Indian demographic group met the target; the Coloured demographic is 7% over-represented compared to the target; and a decrease in the White group brought representivity down to under the annual target.

The PPECB is still 5% short of reaching its 2014/2015 target of 56% for African representation overall. In order to address this situation, emphasis on recruitment and promotion of employees from the African male and female groups, as well as employees with disabilities is a priority. A 1% improvement was achieved in employment of Persons with Disabilities (PWD) during the year under review.

Organisational Development

In the Organisational Development area, the focus has been on creating a high-performance culture. This was done through facilitation of team effectiveness sessions, encouraging dialogues among teams, and the promotion of values.

Learning and Development

The focus to develop the capacity of line managers continued during the 2014/2015 fiscal year. The technical nature of our environment has made it important for us to prioritise leadership development programmes and supervisory skills training initiatives so as to complement the technical skills that our managers already have.

The organisation is also continuing with the development programme, the Agri-Export Technologist Programme (AETP), which is proving beneficial not only for the PPECB, but also for the industry as a whole, as it produces fully trained graduates who are ready to take up positions in the sector. Furthermore, the PPECB is continuing with the internship programme which has allowed the organisation to provide full- time employment to all the Information and Communications Technology interns.

Training programmes are also provided to all levels of employees aligned to our skills development priorities.

Talent Management

In January 2014, the PPECB embarked on developing a talent management approach for the organisation. The talent management framework supports Strategic Objective no. 3 - Strengthening the PPECB's capacity to provide a professional suite of services in providing an integrated approach to link how the PPECB plans to attract, recruit, develop and retain talent that meets the current and future needs of our organisation. The talent management framework has been drafted, and roll-out is planned for the 2015/2016 financial year.

Conclusion

The year under review presented many challenges for the Human Resources Division, however these were consistently met with the required passion and enthusiasm by staff members.

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Pinki Luwaca General Manager: Human Resources

Over the past financial year, the PPECB labora tory has enjoyed oversight from the newly formed

Laboratory Sub-Committee of the Board of Directors of the PPECB. One of its primary objectives is to review and recommend to the Board, management's strategies relating to laboratory services, and its alignment with the PPECB's overall strategy and objectives.

It has been another subdued year for the laboratory as groundnut volumes for export continued to decrease. This had a ripple effect on other services such as rancidity testing in fats and oils, and mycotoxin testing in peanut butter and peanut paste. The laboratory received and analysed 788 (20 kg) groundnut samples (16 tonnes) i.e. 79% of the budgeted volumes for the export market, compared to 479 (20kg) samples in 2013/2014, and 48% of its budgeted volumes for rancidity testing. The South African Grain Information Services (SAGIS, March 2015) reported 11,924 tonnes exported from March 2014 to February 2015, compared to 10,443 tonnes in 2013/2014.

Compositional dairy testing volumes received represented 70% of budgeted volumes for export, with cheese, yoghurt and butter representing 38%, 28% and 19% of dairy products received for testing respectively, for the export market. However, as the compositional testing of dairy products for export, according to Regulation 2581 (regulations relating to dairy products and imitation dairy products) is not centralised at the PPECB, this is not indicative of the type and volume of dairy products exported in 2014/2015. The Department of Agriculture, Forestry and Fisheries (DAFF) has further extended the statutory mandate of the PPECB laboratory, recognising it as an official testing laboratory for the testing of mycotoxins in grain and animal feed for the export market.

The laboratory's quality management system continued to withstand the scrutiny of various authorities during the reporting period. Both second (DAFF, Botswana Bureau of Standards (BOBS)) and third party audits (South African National Accreditation System (SANAS)) were conducted in the facility. DAFF conducted a systems audit on the assessment of compliance to ISO 17025:2005. The laboratory continues to improve its services by extending its scope of accreditation each year.

For the reporting period, the laboratory was audited by SANAS for its extension of scope for pesticide (maximum residue limits) testing in agricultural products of plant origin, and was successful in achieving ISO 17025:2005 technique accreditation (laboratory no. T0248). Three staff members were also deemed competent by SANAS as technical signatories for this service offering. To date, the laboratory boasts six technical signatories deemed competent by SANAS to sign export certificates of analyses.

To meet customer demand and continually improve the accuracy of results generated, and to reduce turnaround times, the laboratory strives to align workflow processes to advancements in technology. With the installation of its Laboratory Information Management System (LIMS), the laboratory is aligning LIMS implementation to Good Automated Laboratory Practises (GALPs) to ensure that LIMS data is reliable and credible.

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Dharmarai Naicker General Manager: Laboratory

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The laboratory has also extended it service offerings to offer anisidine testing of oils in the reporting period. Other new service offerings include patulin testing in apple products, fumonisons in maize derived products, and pesticides in groundnut derived products.

Going green initiatives have also been implemented in the laboratory, from using recycled paper to generate the certificates of analyses, shredding old documents that are removed by a service provider that recycles paper, to recycling printer cartridges and consumable bottles. Lean initiatives adopted include Just in Time (JIT) inventory. The inventory strategy adopted by the laboratory is employed to increase efficiency and decrease waste by receiving goods only as they are needed in the workflow process, thereby reducing inventory costs and saving on storage space.

With respect to learning and development, the laboratory has paid particular attention on up-skilling analysts, with an emphasis on improving technical competence. All technical signatories and those in training attended graded courses relating to statistical method validation and the ISO 17025 documenting course hosted by SANAS, ensuring compliance to good laboratory practises in an accredited facility.

Analysts were also given an opportunity to present their work on pesticide residues and mycotoxin testing at the Afro Residue Conference. The laboratory cleaner was given an opportunity to attend a course that covered the basics of increased workplace management skills. The aim of the course was to instil a sense of responsibility in the workplace, improve attention to detail, highlight the importance on all aspects of hygiene within the workplace, and to increase confidence and competence in fulfilling tasks.

Loadshedding and water cuts that have threatened to halt testing services were experienced in the reporting period. The laboratory has mitigated these risks by installing generators and uninterrupted power supply (UPS) to critical equipment, and identified service providers that will supply water to ensure an uninterrupted service to our customers.

In anticipation of a revised laboratory growth and expansion strategy, the laboratory is looking to expand into the local, import and export markets, and play an integral role in the Food Safety Programme of the PPECB. The main objective of this programme is to ensure compliance to the regulations that are applicable to South African standards on food safety and quality which are in line with EC 178/2002, Codex principles and guidelines on food hygiene, traceability and food safety and EC 1525/1998 - contaminants in foodstuff, so that South Africa continues to penetrate international markets and increase its market share with safe and quality foods.

Introduction

The Information and Communications Tech nology (ICT) Division provides support services to all

divisions at the Perishable Products Export Control Board (PPECB), and supports the successful achievement of the PPECB's strategic objectives. ICT's role is to promote and oversee strategic relationships between ICT and its stakeholders, to offer excellent customer service, and to provide and implement innovative and ground-breaking but affordable technologies.

The most impressive development in ICT has been the emergence and rapid adoption in the use of mobile technology, which has brought about both new opportunities and challenges to ICT. To support this initiative, the ICT Division has started to upgrade its core infrastructure in a massive nationwide project that includes various new technologies. One of the PPECB's strategic objectives is to support the export competitiveness of South Africa's perishable products industries, and in line with global trends, ICT has become the foundation that can enable the PPECB to achieve this goal.

The following strategic goals were adopted at the ICT strategic planning sessions, and reflect key focus areas:

» Customer service excellence;

» People development and talent retention;

» Regulatory compliance and ICT governance;

» ICT business continuity, and disaster recovery;

» Technology innovation; and

» Financial control.

Key ICT Achievements

During the past year, ICT was hard at work implementing and upgrading various technologies within the organisation on a national scale. This was driven mainly by the focus on implementing mobile technology and the infrastructure to support it.

The following are some of the key achievements of ICT in the past year:

» Allocation of Android tablets to more than 380 inspectors and cold chain assessors;

» The official launch of Project Titan and implementation at more than 103 packhouses;

» Successful and seamless implementation of WiFi technology to all offices of the PPECB; and

» Approval and initiation of a national infrastructure upgrade project.

ICT Risks, Future Outlook and Technology Trends

Risk management in ICT is a continuous process, and focus areas include not only the physical infrastructure, systems and equipment used to support the business, but also security and the protection of information.

Keeping a close eye on future growth and technological trends, the ICT Division is cognisant of its role to ensure sustainability. As part of its directive, the following focus areas are of importance:

» Seamless mobile access and connectivity;

» Smarter, more flexible mobile devices;

» Ability to work anytime, anywhere;

» Ability for the ICT division to support and enable rapid growth of enterprise mobile applications;

» Implementation of scalable bandwidth technologies;

» Implementation of intelligent cloud-based networks; and

» Enhancing security awareness and data protection.

Conclusion

In conclusion, the ICT Division will continue to strive to meet the demands of a rapidly growing ICT environment, and to ensure that it effectively supports key business processes. This will be done by actively monitoring the ever growing needs of both internal and external stakeholders to identify op portunities for suitable, cost effective investment in ICT systems with a continual focus on providing customer service excellence.

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INFORMATION AND

COMMUNICATIONS

TECHNOLOGY

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The statement of financial position remains positive, with cash and investments at R66,8 million. Although trade receivables increased from R28,7 million to R41,8 million, debtors are mainly current, and no additional provision for impairment was made in 2015. Trade payables remained broadly in line with activity levels.

Net assets decreased by R9,7 million to R82,8 million, which is the result of the deficit realised in 2015. Amounts included in the reserves are the unrealised revaluation reserve of R12,4 million on land and buildings, and contingency reserves to support operations of R70,4 million.

Supply Chain Management

The PPECB has a dedicated supply chain management (SCM) unit under the office of the Chief Financial Officer. The entity's SCM policies and procedures are aligned to the applicable legislation, National Treasury Regulations and Practice Notes. The PPECB also has in place effectively functioning Bid Evaluation and Bid Adjudication Committees.

For the financial year ending 31 March 2015, a total of R47,8 million was procured from B-BBEE suppliers. This represents 80% of the total measured spend of R59,6 million, which is 8% above the target.

Revenue for the year increased by 12% from R224

million in the last financial year to R251 million in 2015. Revenue from

statutory services increased by R30 million (6%), and food safety services increased

marginally by R283,000 (3%) on the previous year. This is mostly indicative of inflationary growth, as opposed to growth in export volumes. Food safety performed below expectations, caused by a poor export groundnut season, and adversely affected the results of the PPECB's laboratory.

Operating expenses, excluding depreciation, increased by 16% from R224 million to R259 million. This is due primarily to spending on major projects such as the development and roll-out of mobile technology and the upgrading of the Information and Communications Technology (ICT) infrastructure. The PPECB does not require a large amount of fixed assets, so depreciation is relatively low at R2 million, but depreciation increased by 39% as a result of the investments made in renewed ICT.

41

The net financial result for the financial year ending 31 March 2015

reflects a shortfall of R9,7 million. This is R1 million less than the budgeted shortfall of R10,7

million. This improved result is mainly due to income of R251 million that is up on budget by R3,6 million, but partially offset by expenditure exceeding the budget by R2,6 million.

F2015 R'000

B2015 R'000

F2014 R'000

Index F15/B15

Income R251,447 R247,820 R223,683 102%

Statutory R236,455 R223,111 R205,583 106%

Food safety R9,589 R17,205 R9,306 56%

Development R1,180 R2,150 R4,292 55%

Investment R4,223 R5,354 R4,502 79%

Expenditure R261,138 R258,511 R226,079 101%

Employment R176,689 R172,128 R151,356 103%

Activity R30,465 R29,430 R20,761 104%

Administration R53,984 R56,953 R53,962 95%

Net Deficit (R9,689) (R10,691) (R2,396) 91%

CHIEF FINANCIAL

OFFICER’S REPORT

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Prospects for 2016

The PPECB will continue to invest into its three strategic objectives, namely enhancing the credibility of the South African export certificate, supporting the export competitiveness of South Africa's perishable products industries, and strengthening the PPECB's capacity to provide a professional suite of services for its customers.

The spending trend of the PPECB is dictated by delivering on its mandate and set objectives to ensure the credibility and enhance the effectiveness of its service delivery programmes. Working capital management will continue to receive high focus with various initiatives. The cash flow in 2016 should be similar to 2015, with any shortfalls to be funded from the PPECB's reserves.

The PPECB expects a deficit in 2016, which reflects the costs that relate to the further deployment of mobile technology in the organisation and the upgrading of the ICT infrastructure to support the increased user base. Nevertheless, with the pressure of increases in statutory levies being felt, the containment of expenditure remains a high focus, with the PPECB constantly looking for opportunities to improve efficiencies without compromising on the quality of its service delivery programmes.

JOHAN SCHWIEBUS

Chief Financial Officer, the PPECB

42

CONSTANTLY

LOOKING FOR

OPPORTUNITIES

TO IMPROVE

The members of the Audit Committee are appointed by the PPECB Board.

The PPECB's Audit Committee has adopted a formal mandate and terms of reference that have been approved by the Board of Directors. The Committee has conducted its affairs in compliance with this mandate and terms of reference, and has discharged its responsibilities contained therein.

The primary role of the Audit and Risk Committee is to assist the Board in discharging its responsibilities to safeguard the PPECB's assets, maintain adequate accounting records, and to develop and maintain effective systems of internal control. In reviewing the findings of internal audit, nothing has come to the attention of the Committee to indicate any material breakdown in the internal controls, including the internal financial controls of the entity.

The Audit Committee is authorised to have full, free and unrestricted access to all the PPECB's activities, records, property and staff. It is within the scope of the Audit Committee's responsibilities to seek any information it requires from any employee and external parties. Legal or other independent professional advice may be obtained.

Internal Controls

The PPECB's internal control systems include clearly defined lines of accountability and delegation of authority, and provide for full reporting and analysis against approved budgets. The Audit Committee is responsible for determining the adequacy, effectiveness and operation of these internal control systems, providing the assurance that assets are protected against material loss or unauthorised use, and transactions are properly authorised and adequately recorded. The Audit Committee performs the functions required of it by law, and evaluates the effectiveness of the internal controls and the management of risks in compliance with these principles.

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Risk Management

In terms of the Public Finance Management Act (PFMA) and Treasury Regulations, the Board must ensure that a risk assessment is conducted regularly to identify emerging risks. A Risk Management Strategy, that included a fraud prevention plan, was used to direct internal audit efforts and priorities, as well as determine the skills required of management and staff to improve controls and manage these risks.

Financial Reporting

Members of the Audit Committee received and reviewed quarterly management reports. It is the responsibility of management to report as required by the policies and in accordance to the required standards. The PPECB also reported quarterly to the Department of Agriculture, Forestry and Fisheries.

Internal Audit

The Audit Committee reviews the effectiveness of the internal audit function that is performed by external practitioners whose major responsibilities include the examination and evaluation of the effectiveness of operational activities and systems, together with the attendant business risks and financial control.

External Audit

The Audit Committee reviews the scope, performance, significant findings and recommendations made by the external auditors.

Evaluation of the Annual Financial Statements

The Audit Committee has reviewed the following documents:

» The audited annual financial statements to be included in the annual report, which have been discussed with the External Auditor and the Chief Financial Officer;

AUDIT COMMITTEE

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» The External Auditor management letter and management's responses thereto;

» The appropriateness of accounting policies and accounting practices;

» The PPECB's compliance with legal and regulatory provisions;

» The information on predetermined objectives to be included in the annual report; and

» Significant adjustments resulting from the audit.

We have evaluated the annual financial statements of the PPECB for the year ended 31 March 2015, and on the basis of information provided, the Audit Committee considers that it complies with the requirements on the Public Finance Management Act (Act 1 of 1999) as amended, and the Generally Recognised Accounting Practices.

We have reviewed the entity's implementation plan for audit issues raised in the prior year, and we are satisfied that the matters have been adequately resolved.

The Audit Committee recommends that the audited annual financial statements be tabled and submitted to the PPECB's Board for approval.

ANTON RABE

Date: 31 May 2015

Chairperson of the Audit Committee

The reports and statements set out below comprise the financial statements presented to the provincial legislature:

BOARD'S RESPONSIBILITIES AND APPROVAL 47

REPORT OF THE INDEPENDENT AUDITORS 49

BOARD'S REPORT 51

STATEMENT OF FINANCIAL POSITION 53

STATEMENT OF FINANCIAL PERFORMANCE 53

STATEMENT OF CHANGES IN NET ASSETS 54

CASH FLOW STATEMENT 55

ACCOUNTING POLICIES 56

NOTES TO THE FINANCIAL STATEMENTS 61

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2015

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The members are required by the Public Finance Manage ment Act (Act 1 of 1999), to maintain adequate accounting records, and are responsible for the content

and integrity of the financial statements and related financial information included in this report. It is the responsibility of the members to ensure that the financial statements

fairly present the state of affairs of the entity as at the end of the financial year, and the results of its operations and cash flows for the period then ended. The external auditors are engaged to express

an independent opinion on the financial statements, and were given unrestricted access to all financial records and related data.

The financial statements have been prepared in accordance with Standards of Generally Recognised Accounting Practice (GRAP) including any inter pretations, guidelines and directives issued by the Accounting Standards Board.

The financial statements are based upon appropriate accounting policies consistently applied, and supported by reasonable and prudent judgements and estimates.

The members acknowledge that they are ultimately responsible for the system of internal financial control established by the entity, and place considerable importance on maintaining a strong control environment. To enable the members to meet these responsibilities, the board sets standards for internal control aimed at reducing the risk of error or deficit in a cost effective manner. The standards include the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures, and adequate segregation of duties to ensure an acceptable level of risk. These controls are monitored throughout the entity, and all employees are required to maintain the highest ethical standards in ensuring the entity's business is conducted in a manner that in all reasonable circumstances is above reproach. The focus of risk management in the entity is on identifying, assessing, managing and monitoring all known forms of risk across the entity. While operating risk cannot be fully eliminated, the entity endeavours to minimise it by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints.

The members are of the opinion, based on the information and explanations given by Management, that the system of internal control provides reasonable assurance that the financial records may be relied on for the preparation of the financial statements. However, any system of internal financial control can provide only reasonable, and not absolute, assurance against material misstatement or deficit.

The members have reviewed the entity's cash flow forecast for the year to 31 March 2016 and, in the light of this review and the current financial position, they are satisfied that the entity has, or has access to, adequate resources to continue in operational existence for the foreseeable future.

The financial statements are prepared on the basis that the entity is a going concern. The members have no reason to believe that the entity will not be a going concern in the foreseeable future. These financials support the viability of the entity.

The external auditors are responsible for inde pendently reviewing and reporting on the entity's financial statements. The financial statements have been examined by the entity's external auditors, and their report is presented on pages 49 to 50.

The financial statements set out on pages 53 to 76, which have been prepared on the going concern basis, were approved by the board on 21 May 2015, and were signed on its behalf by:

MR A PETERSEN Chairperson of the Board

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BOARD'S RESPONSIBILITIES

AND APPROVAL

DR MJ MASHABA Vice-Chairperson

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REPORT ON THE FINANCIAL STATEMENTS

INTRODUCTION

We have audited the financial statements of the Perishable Products Export Control Board (PPECB)

set out on pages 53 to 76, which comprise the statement of financial position as at 31 March 2015, the statement of financial performance, statement of changes in net assets, the cash flow statement and the statement of comparison of budget and actual amounts for the year then ended; as well as the notes, comprising a summary of significant accounting policies and other explanatory information.

ACCOUNTING AUTHORITY'S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

The accounting authority is responsible for the preparation and fair presentation of these financial statements in accordance with the South African Standards of Generally Recognised Accounting Practice (SA Standards of GRAP) and the requirements of the Public Finance Management Act, 1999 (Act 1 of 1999) and Perishable Products Export Control Act, (Act 9 of 1983), and for such internal controls as the accounting authority determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

AUDITOR'S RESPONSIBILITY

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Public Audit Act of South Africa, 2004 (Act 25 of 2004) (PAA), the general notice issued in terms thereof and International Standards on Auditing. Those standards require that we comply with ethical requirements, and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

In making those risk assessments, the auditor considers internal control relevant

to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management as well as evaluating the overall presentation of the financial statements, policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OPINION

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Perishable Products Export Control Board as at 31 March 2015 and its financial performance and cash flows and statement of comparison of budget and actual amounts for the year then ended, in accordance with the SA Standard of GRAP and the requirements of the Public Finance Management Act, 1999 (Act 1 of 1999) and Perishable Products Export Control Act, (Act 9 of 1983).

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

In accordance with the PAA and the General Notice issued in terms thereof, we report the following findings on the performance information against predetermined objectives, non-compliance with legislations, as well as internal control. We performed tests to identify reportable findings as described under each sub-heading, but not to gather evidence to express assurance on these matters. Accordingly, we do not express an opinion or conclusion on these matters.

PREDETERMINED OBJECTIVES

We performed procedures to obtain evidence about the usefulness and reliability of the reported performance information for the following selected programmes presented in the annual performance report of the entity for the year ended 31 March 2015:

» Statutory Operations: Coastal

» Statutory Operations: South

We evaluated the reported performance information against the overall criteria of usefulness and reliability.

We evaluated the usefulness of the reported performance information to determine whether it was presented in accordance with the National Treasury's annual reporting principles, and whether the reported performance was consistent with the planned objectives. We further performed tests to determine whether indicators and targets were well defined,

INDEPENDENT AUDITORS'

REPORT TO PARLIAMENT

AND THE MEMBERS OF THE

BOARD OF DIRECTORS OF THE

PPECB ON THE FINANCIAL

STATEMENTS OF THE PPECB

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verifiable, specific, measurable, time bound and relevant, as required by the National Treasury's Framework for managing programme performance information (FMPPI).

We assessed the reliability of the reported performance information to determine whether it was valid, accurate and complete.

We did not raise any material findings in respect of the usefulness and reliability of the reported performance information for the selected programmes.

COMPLIANCE WITH LEGISLATION

We performed procedures to obtain evidence that the entity had complied with applicable legislation regarding financial matters, financial management and other related matters. We did not identify any instances of material non-compliance with specific matters in key legislation, as set out in the general notice issued in terms of the PAA.

INTERNAL CONTROL

We considered internal control relevant to our audit of the financial statements, annual performance report and compliance with legislation. We did not identify any significant deficiencies in internal control.

SizweNtsalubaGobodo Inc. Director: NATALIE ARENDSE Registered auditor

21 May 2015

2nd Floor, Block A - Century Falls 32 Century Boulevard, Century City, 7441

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5. Changes in members and executives

The Minister of the Department of Agriculture, Forestry and Fisheries (DAFF) has been informed of a board member's resignation (Mr TW Reddell), and the process to have the position filled has been initiated.

On 1 December 2014, the Chief Executive Officer, Mr Stuart Symington resigned. On 13 January 2015, Mr Cyril Julius was appointed as the Acting Chief Executive Officer.

BOA RD'S REP ORT

1. Introduction

The members of the board have pleasure in presenting its report and the audited financial statements of

the Perishable Products Export Control Board (PPECB) for the year ended 31 March 2015.

2. Ownership

The Perishable Products Export Control Board is a statutory entity and is listed as a Schedule 3A, national public entity in South Africa. It is accountable to the Minister of Agriculture, Forestry and Fisheries.

3. Principal activities

MAIN BUSINESS AND OPERATIONS

The entity conducts its business by bringing about the orderly and efficient export of perishable products from the Republic of South Africa, in terms of the Perishable Products Export Control Act 9 of 1983 (PPEC Act). It also operates as an assignee for the Department of Agriculture, Forestry and Fisheries under the requirements of the Agricultural Product Standards Act 119 of 1990 (APS Act). The PPECB was established in 1926.

4. Board

The members of the entity during the year and to the date of this report are as follows:

Name Industry Changes

Ms J Atwood-Palm Fruit & Vegetable Canning

Ms CH Engelbrecht Citrus

Ms CL Kutta Citrus

Dr MJ Mashaba Pome & Stone

Mr A Petersen Other Products

Mr A Rabe Pome & Stone

Mr TW Reddell Marine Resigned 01 December 2014

Ms E Scholtz Table Grape

Mr W Steenkamp Ministerial Representative

Mr D Westcott Subtropical

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6. Going concern

The financial statements have been prepared on the basis of accounting policies applicable to a going concern. This basis presumes that funds will be available to finance future operations, and that the realisation of assets and settlement of liabilities, contingent obligations and commitments will occur in the ordinary course of business.

7. Subsequent events

The members are not aware of any matter or circumstance arising since the end of the financial year that impact on the financial statements.

8. Compliance with legislation

The Department of Agriculture, Forestry and Fisheries is in the process of reviewing the Perishable Products Export Control Act 9 of 1983 and the Agriculture Products Standards Act 119 of 1990.

Sections 51 and 55 of the PFMA impose certain obligations on the board and these relate to the prevention, identification and reporting of all fruitless, wasteful and irregular expenditure and collection of revenue. In order to comply with these obligations, the Board of Directors has prepared a materiality framework.

The board believes that management has, during the year, complied, in all material respects, with all legislation and regulations applicable to it, including without limitation, the Public Finance Management Act, 1 of 1999, the Treasury Regulations and the Income Tax Act, 58 of 1962.

9. Board members' interest in contracts

To their knowledge, none of the members of the board had any interest in contracts entered into during the year under review.

10. Auditors

SizweNtsalubaGobodo Incorporated has been appointed and approved by the Auditor General as the PPECB's external auditors.

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Statement of Financial Position as at 31 March 2015

Figures in Rand Note(s) 2015 2014

Assets

Current assets

Trade and other receivables 4 32,547,653 28,656,893

Investments 5 41,762,086 72,567,341

Cash and cash equivalents 6 25,017,488 6,981,355

99,327,227 108,205,589

Non-current assets

Property, plant and equipment 7 22,746,365 20,888,611

Total assets 122,073,592 129,094,200

Liabilities

Current liabilities

Trade and other payables 11 29,282,899 27,568,926

Provisions 12 9,974,115 9,019,763

39,257,014 36,588,689

Total liabilities 39,257,014 36,588,689

Net assets 82,816,578 92,505,511

Reserves

Revaluation reserve 12,426,576 12,426,576

Asset replacement reserve 8 9,805,000 8,797,890

Self-insurance reserve 9 5,220,000 5,000,000

Reserve fund 10 55,365,002 66,281,045

Total net assets 82,816,578 92,505,511

Statement of Financial Performance

Figures in Rand Note(s) 2015 2014

Revenue 13 246,081,594 214,904,204

Other income 14 1,142,998 4,277,084

Operating expenses 15 & 16 (261,135,622) (226,066,930)

Operating deficit (13,911,030) (6,885,642)

Investment revenue 17 4,223,271 4,502,142

Finance costs 18 (1,173) (13,007)

Deficit for the year (9,688,932) (2,396,507)

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Statement of Changes in Net Assets

Figures in RandSurplus levy for disposal

Revaluation reserve

Asset replacement

reserve

Self-insurance reserve

Reserve fund

Total reserves

Total net assets

Balance at 1 April 2013 - 9,771,630 7,150,000 5,000,000 70,325,441 92,247,071 92,247,071

(Deficit) / Surplus for the year (2,396,507) - - - - (2,396,507) (4,793,014)

Transfer to asset replacement fund - - 1,647,890 - (1,647,890) - -

Land and buildings revaluation - 2,654,946 - - - 2,654,946 2,654,946

Transfer from surplus levy for disposal in terms of Section 18(8) and (9) of Act 9 of 1983

- - - - (2,396,507) (2,396,507) (2,396,507)

Transfer to reserve fund 2,396,507 - - - - 2,396,507 4,793,014

Balance at 1 April 2014 - 12,426,576 8,797,890 5,000,000 66,281,045 92,505,511 92,505,511

Changes in net assets

(Deficit) / Surplus for the year (9,688,932) - - - - (9,688,932) (19,377,864)

Transfer to asset replacement fund - - 1,007,110 - (1,007,110) - -

Transfer to self-insurance fund - - - 220,000 (220,000) - -

Transfer from surplus levy for disposal in terms of Section 18(8) and (9) of Act 9 of 1983

- - - - (9,688,932) (9,688,932) (9,688,932)

Transfer to reserve fund 9,688,932 - - - - 9,688,932 19,377,864

Balance at 31 March 2015 - 12,426,576 9,805,000 5,220,000 55,365,002 82,816,578 82,816,578

Note(s) 9

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Cash Flow Statement

Figures in Rand Note(s) 2015 2014

Cash flows from operating activities

Receipts

Rendering of services 243,333,832 216,271,025

Interest received - investment 4,223,271 4,502,142

247,557,103 220,773,167

Payments

Employee costs (175,734,356) (150,315,110)

Suppliers (80,358,543) (71,023,343)

Finance costs (1,173) (13,007)

(256,094,072) (221,351,460)

Net cash flows from operating activities 19 (8,536,969) (578,293)

Cash flows from investing activities

Purchase of property, plant and equipment 7 (4,598,788) (3,009,232)

Proceeds from sale of property, plant and equipment 7 366,636 62,321

Movement in investments 30,805,255 (2,437,157)

Net cash flows from investing activities 26,573,103 (5,384,068)

Net increase / (decrease) in cash and cash equivalents 18,036,133 (5,962,361)

Cash and cash equivalents at the beginning of the year 6,981,355 12,943,716

Cash and cash equivalents at the end of the year 6 25,017,488 6,981,355

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1. Presentation of Financial Statements

The financial statements have been prepared in accordance with the Standards of Generally

Recognised Accounting Practice (GRAP), including any interpretations, guidelines and directives issued by the Accounting Standards Board.

These financial statements have been prepared on an accrual basis of accounting and are in accordance with historical cost convention unless specified otherwise. They are presented in South African Rand.

A summary of the significant accounting policies, which have been consistently applied, are disclosed below.

1.1 PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are initially measured at cost.

The cost of an item of property, plant and equipment is the purchase price and other costs attributable to bring the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Trade discounts and rebates are deducted in arriving at the cost.

Where an asset is acquired through a non-exchange transaction, its cost is its fair value as at date of acquisition.

Where an item of property, plant and equipment is acquired in exchange for a non-monetary asset or monetary assets, or a combination of monetary and non-monetary assets, the asset acquired is initially measured at fair value (the cost).

If the acquired item's fair value was not determinable, its deemed cost is the carrying amount of the asset(s) given up.

When significant components of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

Land and buildings comprise mainly office buildings. Freehold land and buildings are shown at fair value, based on valuations by external independent valuers every three years, less subsequent depreciation for buildings. Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset, and the net amount is restated to the revalued amount of the asset. All other property, plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the asset's carrying amount, or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Board, and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the statement of financial performance during the financial period in which they are incurred.

Increases in carrying value arising on revaluation are credited directly to the revaluation reserve. Decreases that offset previous increases of the same asset are charged against the revaluation reserve directly in equity; all other decreases are charged to the statement of financial performance.

Land is not depreciated. Depreciation on other assets is calculated using the straight-line method to allocate

their cost or revalued amounts to their residual values over their estimated useful lives.

Costs associated with developing or maintaining computer software programmes are recognised as an expense as incurred. Minor assets of R5 000 or less are charged to the statement of financial performance, in full, as expenditure in the year purchased.

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each statement of financial position date. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with carrying amounts. These are included in the statement of financial performance. When revalued assets are sold, the amounts included in the revaluation reserve are transferred to the reserve fund.

Assets that have indefinite useful life, such as land, are not subject to amortisation, and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of the asset's fair value less costs to sell and value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows. Non-financial assets that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

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The useful lives of items of property, plant and equip ment have been assessed as follows:

ItemAverage

useful life

Buildings 50 years

Computer equipment 3-7 years

Furniture and equipment 3-10 years

Motor vehicles 5 years

Technical equipment 3-8 years

1.2 FINANCIAL INSTRUMENTS

FINANCIAL ASSETS

The Board classifies its financial assets as held to maturity. Management determines the classification of financial assets at initial recognition.

This applies to investments where there are fixed or determinable payments and fixed maturity dates, and the Board has the positive intent and ability to keep the investments until maturity. These investments are measured and recognised at amortised costs, with interest-income recognised in the statement of financial performance.

Assets in this category are classified as current assets if they are expected to be realised within 12 months of the statement of financial position date.

The Board assesses at each statement of financial position date whether there is objective evidence that a financial asset or a group of financial assets are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss, measured as the difference between the acquisition cost and the current fair value,less any impairment loss on that financial asset previously recognised in profit or loss, is removed from net assets and recognised in the statement of financial performance.

RECEIVABLES FROM EXCHANGE TRANSACTIONS

Trade receivables are measured at initial recognition at fair value, and are subsequently measured at amortised cost, using the effective interest rate method. Appropriate allowances for estimated irrecoverable amounts are recognised in surplus or deficit when there is objective evidence that the asset is impaired. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments (more than 30 days overdue) are considered indicators that the trade receivable is impaired. The allowance recognised is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition.

The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the deficit is recognised in surplus or deficit within operating expenses. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited against operating expenses in surplus or deficit.

PAYABLES FROM EXCHANGE TRANSACTIONS

Trade payables are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate method.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents comprise cash on hand and deposits held at call with banks and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the statement of financial position.

1.3 LEASES

A lease is classified as a finance lease if it transfers, substantially, all the risks and rewards incidental to ownership. A lease is classified as an operating lease if it does not transfer, substantially, all the risks and rewards incidental to ownership.

OPERATING LEASES - LESSEE

Operating lease payments are recognised as an expense on a straight-line basis over the lease term. The difference between the amounts recognised as an expense and the contractual payments are recognised as an operating lease asset or liability.

1.4 PROVISIONS AND CONTINGENCIES

Provisions are recognised when:

» the entity has a present obligation as a result of a past event;

» it is probable that an outflow of resources embodying economic benefits or service potential will be required to settle the obligation; and

» a reliable estimate can be made of the obligation.

Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. Provisions are reversed if it is no longer probable that an outflow of resources embodying economic benefits or service potential will be required to settle the obligation.

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument.

Loan commitment is a firm commitment to provide credit under pre-specified terms and conditions.

The entity recognises a provision for financial guarantees and loan commitments when it is probable that an outflow of resources embodying economic benefits and service potential will be required to settle the obligation, and a reliable estimate of the obligation can be made.

Determining whether an outflow of resources is probable in relation to financial guarantees requires judgement. Indications that an outflow of resources may be probable are:

» financial difficulty of the debtor;

» defaults or delinquencies in interest and capital repayments by the debtor;

» breaches of the terms of the debt instrument that result in it being payable earlier than the agreed term and the ability of the debtor to settle its obligation on the amended terms; and

» a decline in prevailing economic circumstances (e.g. high interest rates, inflation and unemployment) that impact on the ability of entities to repay their obligations.

Where a fee is received by the entity for issuing a financial guarantee and/or where a fee is charged on loan commitments, it is considered in determining the best estimate of the amount required to settle the obligation at reporting date. Where a fee is charged and the entity considers that an outflow of economic resources is probable, an entity recognises the obligation at the higher of:

» the amount determined used in the Standard of GRAP on Provisions, Contingent Liabilities and Contingent Assets; and

» the amount of the fee initially recognised less, where appropriate, cumulative amortisation recognised in accordance with the Standard of GRAP on Revenue from Exchange Transactions.

1.5 REVENUE RECOGNITION

Revenue comprises the fair value of the consideration received or receivable for the sale of services in the ordinary course of the Board's activities. Revenue is recognised in the accounting period in which the services are rendered, and is exclusive of value added taxation.

Revenue is recognised when the amount of revenue can be reliably measured, and it is probable that future economic benefits will flow to the Board. The amount of revenue is not considered to be reliably measurable until all contingencies relating to the delivery of service have been resolved. The Board bases its estimates on historical results, taking into consideration the type of customer, the type of transaction, and the specifics of each arrangement.

Interest income is recognised on a time proportion basis using the effective interest method. When a receivable is impaired, the Board reduces the carrying amount to its recoverable amount, being the future estimated cash flow discounted at the original effective interest rate of the instrument. Interest income on impaired loans is recognised using the original effective interest rate.

1.6 BORROWING COSTS

It is inappropriate to capitalise borrowing costs when, and only when, there is clear evidence that it is difficult to link the borrowing requirements of an entity directly to the nature of the expenditure to be funded i.e. capital or current.

Borrowing costs are recognised as an expense in the period in which they are incurred.

1.7 IMPAIRMENT OF CASH-GENERATING ASSETS

Cash-generating assets are those assets held by the entity with the primary objective of generating a commercial return.

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When an asset is deployed in a manner consistent with that adopted by a profit-orientated entity, it generates a commercial return.

Impairment is a loss in the future economic benefits or service potential of an asset, over and above the systematic recognition of the loss of the asset's future economic benefits or service potential through depreciation (amortisation).

Carrying amount is the amount at which an asset is recognised in the statement of financial position after deducting any accumulated depreciation and accumulated impairment losses thereon.

A cash-generating unit is the smallest identifiable group of assets held with the primary objective of generating a commercial return that generates cash inflows from continuing use that are largely independent of the cash inflows from other assets or groups of assets.

Costs of disposal are incremental costs directly attributable to the disposal of an asset, excluding finance costs and income tax expense.

Depreciation (amortisation) is the systematic allocation of the depreciable amount of an asset over its useful life.

Fair value less costs to sell is the amount obtainable from the sale of an asset in an arm's length transaction between knowledgeable, willing parties, less the costs of disposal.

Recoverable amount of an asset or a cash-generating unit is the higher its fair value, less costs to sell and its value in use.

Useful life is either:

(a) the period of time over which an asset is expected to be used by the entity; or

(b) the number of production or similar units expected to be obtained from the asset by the entity.

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1.8 RESERVES

(i) Self-insurance reserve:

A self-insurance reserve fund was established to manage the uninsured risks of the Board. The reserve covers uninsured movable assets (laptop computers, as well as technical equipment carried by inspectors) and also provides for potential indemnity claims based on 1.5% of turnover.

(ii) Asset replacement fund:

This reserve was established to prevent excessive levy fluctuations by providing for increased replacement cost (versus original purchase cost) of computer and technical equipment.

(iii) Revaluation reserve:

This reserve was established due to surpluses that were generated on the revaluation of land and buildings.

1.9 EMPLOYEE BENEFITS

Employee benefits are all forms of consideration given by an entity in exchange for service rendered by employees.

A constructive obligation is an obligation that derives from an entity's actions, whereby an established pattern of past practice, published policies or a sufficiently specific current statement, the entity has indicated to other parties that it will accept certain responsibilities and as a result, the entity has created a valid expectation on the part of those other parties that it will discharge those responsibilities.

SHORT-TERM EMPLOYEE BENEFITS

Short-term employee benefits are employee benefits (other than termination benefits) that are due to be settled within twelve months after the end of the period in which the employee renders the related service.

Short-term employee benefits include items such as:

» wages and salaries;

» short-term compensated absences (such as paid annual leave) where the compensation for the absences is due to be settled within twelve months after the end of the reporting period in which the employee renders the related employee service;

» bonus and performance related payments payable within twelve months after the end of the reporting period in which the employee renders the related service;

The entity recognises the expected cost of bonus and performance related payments when the entity has a present legal or constructive obligation to make such payments as a result of past events, and a reliable estimate of the obligation can be made. A present obligation exists when the entity has no realistic alternative but to make the payments.

LONG-TERM EMPLOYEE BENEFITS

The Board has an obligation to provide long-term service benefits to all employees appointed prior to 1997.

According to the current long service bonus policy, which the Board institutes and operates, permanent employees are entitled to a long service bonus after completion of a continuous period of service of 20 years, 30 years and 40 years.

POST-EMPLOYMENT BENEFITS: DEFINED CONTRIBUTION PLANS

Defined contribution plans are post-employment benefit plans under which an entity pays fixed contributions into a separate entity (a fund), and will have no legal or constructive obligation to pay further contributions if the fund does not hold sufficient assets to pay all employee benefits relating to employee service in the current and prior periods.

When an employee has rendered service to the entity during a reporting period, the entity recognises the contribution payable to a defined contribution plan in exchange for that service:

» as a liability (accrued expense), after deducting any contribution already paid. If the contribution already paid exceeds the contribution due for service before the reporting date, an entity recognises that excess as an asset (prepaid expense) to the extent that the prepayment will lead to, for example, a reduction in future payments or a cash refund; and

» as an expense, unless another Standard requires or permits the inclusion of the contribution in the cost of an asset.

1.10 OFF-SETTING

If the Board undertakes, in the course of its ordinary activities, transactions that do not generate revenue but are incidental to its main revenue-generating activities, the results of such transactions are presented by netting any income with related expenses arising on the same transaction, when this presentation reflects the substance of the transaction or other event.

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2. New Standards and Interpretations

2.1 STANDARDS AND INTERPRETATIONS EFFECTIVE IN THE CURRENT YEAR

In the current year, the following revised standards and interpretations are effective and relevant to its operations:

Standard / Interpretation:

GRAP 24: Presentation of Budget Information in the Financial Statements

GRAP 25: Employee Benefits

GRAP 104: Financial Instruments

GRAP 1 (as revised 2010): Presentation of Financial Statements

GRAP 2 (as revised 2010): Cash Flow Statements

GRAP 3 (as revised 2010): Accounting Policies, Changes in Accounting Estimates and Errors

GRAP 13 (as revised 2010): Leases

GRAP 16 (as revised 2010): Investment Property

GRAP 17 (as revised 2010): Property, Plant and Equipment

GRAP 100 (as revised 2010): Non-current Assets Held for Sale and Discontinued Operations

GRAP 9 (as revised 2012): Revenue from Exchange Transactions

2.2 STANDARDS AND INTERPRETATIONS ISSUED, BUT NO EFFECTIVE DATE GAZETTE

Management has considered the standards below and concluded that the standards will not have a material impact on the entity's results; this will be reassessed in the future:

Standard / Interpretation:

GRAP 32: Service Concession Arrangements: Grantor

GRAP 20: Related Party Disclosures

GRAP 108: Statutory Receivables

2.3 STANDARDS AND INTERPRETATIONS ISSUED, BUT NOT YET EFFECTIVE

Management has considered the standards below, and concluded that the standards will not have a material impact on the entity's results; this will be reassessed in the future:

Standard / Interpretation:

GRAP 18: Segment Reporting

GRAP 105: Transfers of Functions Between Entities Under Common Control

GRAP 106: Transfers of Functions Between Entities Not Under Common Control

GRAP 107: Mergers

NOTES TO THE

FINANCIAL

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3. Risk Management

FINANCIAL RISK MANAGEMENT

The entity's activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk.

The Board of Directors acknowledges its responsibility for establishing and communicating appropriate risk and control policies and ensuring adequate risk management processes are in place. The audit committee assists the Board of Directors in discharging its risk management obligations.

The principal objectives of risk management are to:

» Review the Board's risk philosophy, strategy, policies and processes recommended by Senior Management;

» Review compliance with risk policies and with the overall risk profile of the Board;

» Review and assess the integrity of the process and procedures for identifying, assessing, recording and monitoring of risk;

» Review the adequacy and effectiveness of the Board's risk management function and its implementation by management; and to

» Ensure that material risks have been identified, assessed and receive attention.

The Board's risk management processes, of which the systems of internal, financial and operating controls are an integral part, are designed to control and monitor risk throughout the Board. For effectiveness, these processes rely on regular communication, sound judgement and thorough knowledge of statutory and operational activities. Management is tasked with integrating the management risk into the day-to-day activities of the Board.

LIQUIDITY RISK

Prudent liquidity risk management implies maintaining sufficient cash reserves. Due to the dynamic nature of operational activities, the Board aims to be conservative in funding by keeping committed cash reserves available.

CREDIT RISK

Credit risk arises from cash and equivalents and deposits with banks and financial institutions, as well as credit exposure to customers, including outstanding receivables and committed transactions.

Measures taken by the Board to limit credit risk to acceptable levels include, inter alia, an assessment of the credit quality of the customer, by taking into account their financial position; past experience and other factors; the application of standard credit acceptance procedures to assess potential clients; daily monitoring of collectible balances at both branch and head office level; and the suspension of services to accounts which exceed the Board's payment terms.

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The table below shows the credit ratings and balances of the financial institutions in which the Board held deposits at statement of financial position date:

Financial Institutions Fitch Credit Rating 2015 2014

ABSA AAA 22,902,363 24,672,384

Nedbank AA 19,698,680 32,896,544

Rand Merchant Bank AA 10,349,981 15,000,000

Standard Bank AA 13,528,189 6,705,211

66,479,213 79,274,139

The carrying amount of financial assets in the statement of financial position represents the Board's exposure to credit risk in relation to these assets. Credit limits assigned to customers may be exceeded due to timing differences. Such instances are individually approved and closely monitored by management. Management does not expect any losses from non-performance by these counter-parties.

The Board's exposure to concentrated credit risk is low due to the large number of customers and their dispersion across different geographical areas and product sectors.

The dispersion of income per product from statutory levies is:

2015 2014

Citrus fruit 40% 41%

Grapes 19% 16%

Pome fruit 15% 18%

Stone fruit 5% 5%

Subtropical fruit 3% 2%

Vegetables 2% 3%

Flowers and bulbs 1% 1%

Canned products 1% 1%

Other products 8% 8%

Maize 6% 5%

100% 100%

FAIR VALUE ESTIMATION

The carrying value, less impairment provision of trade receivables and payables are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the board for similar financial instruments. The directors are of the opinion that the carrying value of financial instruments approximates fair value.

CASH FLOW AND FAIR VALUE INTEREST RATE RISK

The Board's interest rate risk arises from investments held to maturity, as well as from cash and cash equivalents. The Board's policy is to maintain its investments across a range of high quality financial institutions. Interest rate exposure and investment allocations are evaluated by management on a regular basis.

This risk is managed by maintaining an appropriate mix of investments with registered financial institutions. Interest-bearing investments are held with reputable financial institutions in order to minimise exposure.

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CAPITAL RISK MANAGEMENT

Capital is regarded as total reserves which is a result of accumulated surpluses. The Board strives to maintain a sufficient reserve as to sustain its statutory obligations. The level of the reserves are dependent on the approval of the Minister of the Department of Agriculture, Forestry and Fisheries.

4. Trade and Other Receivables

2015 2014

Trade debtors 32,204,235 28,316,056

Sundry debtors 443,823 441,242

Provision for impairment of receivables (100,405) (100,405)

32,547,653 28,656,893

TRADE AND OTHER RECEIVABLES PAST DUE BUT NOT IMPAIRED

Trade and other receivables which are less than 30 days past due are not considered to be impaired. At 31 March 2015, R268,841 (2014: R95,931) was past due but not impaired. These relate to a number of independent customers for whom there is no recent history to default.

The ageing of amounts past due but not impaired is as follows:

2015 2014

Between 30 and 60 days after statement 268,841 95,931

TRADE AND OTHER RECEIVABLES IMPAIRED

As of 31 March 2015, trade and other receivables of R100,405 (2014: R100,405) were impaired and provided for.

The individually impaired receivables mainly relate to producers and exporters who are in unexpectedly difficult economic situations.

The ageing of these receivables is as follows:

2015 2014

Less than one year 100,405 100,405

100,405 100,405

RECONCILIATION OF PROVISION FOR IMPAIRMENT OF TRADE AND OTHER RECEIVABLES

Opening balance 100,405 104,927

Provision for impairment - 100,405

Unused amounts reversed - (84,026)

Bad debt recovered - (20,901)

100,405 100,405

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Opening balance Additions Disposals Depreciation Total

Land and buildings 14,483,363 - - (153,092) 14,330,271

Furniture 736,705 396,953 (9,528) (251,226) 872,904

Motor vehicles 179,967 - - (42,456) 137,511

Technical equipment 5,488,576 4,201,835 (357,108) (1,927,624) 7,405,679

20,888,611 4,598,788 (366,636) (2,374,398) 22,746,365

5. Investments

2015 2014

ABSA 15,713,425 24,670,797

Nedbank 15,698,680 32,896,544

Rand Merchant Bank 10,349,981 15,000,000

41,762,086 72,567,341

6. Cash and Cash Equivalents

Cash and cash equivalents consist of:

2015 2014

Cash on hand 16,199 3,273

Bank balances 5,758,808 5,544,509

Short-term deposits 19,242,481 1,433,573

25,017,488 6,981,355

The effective interest rate is between 0,10% and 5,55%.

7. Property, Plant and Equipment

2015 2014

Cost/ Valuation

Accumulated depreciation and

accumulated impairment

Carrying value Cost/ Valuation

Accumulated depreciation and

accumulated impairment

Carrying value

Land and buildings 14,550,000 (219,729) 14,330,271 14,550,000 (66,637) 14,483,363

Furniture 3,060,079 (2,187,175) 872,904 2,943,695 (2,206,990) 736,705

Motor vehicles 212,281 (74,770) 137,511 212,281 (32,314) 179,967

Technical equipment 17,736,211 (10,330,532) 7,405,679 14,520,332 (9,031,756) 5,488,576

Total 35,558,571 (12,812,206) 22,746,365 32,226,308 (11,337,697) 20,888,611

RECONCILIATION OF PROPERTY, PLANT AND EQUIPMENT - 2015

RECONCILIATION OF PROPERTY, PLANT AND EQUIPMENT - 2014

Opening balance Additions Disposals Revaluations Depreciation Total

Land and buildings 11,895,054 - - 2,654,946 (66,637) 14,483,363

Furniture 747,585 213,011 (17,031) - (206,860) 736,705

Motor vehicles - 212,281 - - (32,314) 179,967

Technical equipment 4,607,689 2,583,940 (45,290) - (1,657,763) 5,488,576

17,250,328 3,009,232 (62,321) 2,654,946 (1,963,574) 20,888,611

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REVALUATIONS

Cape Town - Erf 19927, Parow, with office building thereon:

The property was revalued by DJB Hoffman, an independent registered valuer as at 1 December 2013. Valuations were made in accordance with the investment approach method, using the basis of recent market transactions, rentals of similar properties in the area, and an insurance valuation of the property.

Durban - Portion 1 of Erf 1736, Wentworth, with office building thereon:

The property was revalued by Roper Associates, an independent registered valuer as at 7 January 2014. Valuations were made in accordance with the investment approach method, using the basis of recent market transactions, rentals of similar properties in the area, and an insurance valuation of the property.

Land and buildings are re-valued independently every 3 years.

Cost of assets with zero carrying value:

2015 2014

Furniture 1,295,543 1,256,826

Technical equipment 6,152,797 3,937,271

7,448,340 5,194,097

8. Asset Replacement Fund

2015 2014

Opening balance 8,797,890 7,150,000

Transfer from reserve fund 1,007,110 1,647,890

9,805,000 8,797,890

9. Self-insurance Reserve

2015 2014

Opening balance 5,000,000 5,000,000

Transfer to self-insurance reserve 220,000 -

5,220,000 5,000,000

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10. Reserve Fund

The Board applied to the Minister of Agriculture, Forestry and Fisheries on 16 January 2009 for approval to increase the reserve fund level to R75,000,000 with effect 31 March 2008, and to be adjusted annually thereafter by the annual CPIX as announced by SA Statistics. Based on the above, the requested level at 31 March 2015 will be R114,706,371.

A detailed calculation, approved by the members of the board on 13 March 2014, indicates that a reserve level of between R90 million and R95 million should be sufficient to sustain the PPECB's operational activities for the financial year 2014/2015.

11. Trade and Other Payables

2015 2014

Trade payables 8,132,349 9,953,180

Payroll control accounts 2,434,381 511,838

Accrued expenses 2,600,043 2,293,162

Deposits received 6,166,961 6,101,155

Accrued leave pay 9,581,691 8,390,382

Provision for audit fees 254,254 199,203

Agricultural product samples 113,220 120,006

29,282,899 27,568,926

12. Provisions

RECONCILIATION OF PROVISIONS - 2015

Opening Balance AdditionsUtilised during

the yearReversed during

the yearTotal

Provision for performance bonus 9,019,763 9,974,115 (8,929,953) (89,810) 9,974,115

RECONCILIATION OF PROVISIONS - 2014

Opening Balance AdditionsUtilised during the

yearTotal

Provision for performance bonus 7,978,376 8,968,042 (7,926,655) 9,019,763

The performance bonus pay-out is subject to approval by the members of the board.

Management performed an estimation on the entity's liability relating to the long service bonus. All permanent employees appointed prior to 1997 may become entitled to the long service bonus upon completion of 20, 30 and 40 years service. Based on the current policy, the estimated liability for the long service bonus is R1,264,559. The policy is currently under review and thus the probable liability relating to the long service bonus has not been recognised in the financial statements.

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13. Revenue

2015 2014

Perishable products export levies 62,078,988 54,067,109

Other services 4,317,592 6,588,777

Value added services 9,588,750 9,306,214

Agricultural product standard levies 163,957,786 139,676,777

Container inspections 6,138,478 5,265,327

246,081,594 214,904,204

14. Other Income

2015 2014

Training and development 1,180,373 4,292,039

Loss on sale of fixed assets (37,375) (14,955)

1,142,998 4,277,084

15. Operating Expenses

2015 2014

Administration expenses 449,549 459,672

Auditors remuneration 431,938 321,466

Bad debt expense - 79,504

Board members' emoluments 1,236,612 865,768

Computer expenses 8,464,723 9,390,782

Consultation fees 2,329,086 2,082,840

Corporate identity and communication 2,012,656 1,448,440

Depreciation 2,374,398 1,963,574

Electricity 1,009,118 672,089

Insurance 437,111 460,444

Legal fees 74,276 72,432

Licence and affiliation fees 2,515,015 2,072,810

Meetings and workshops 5,399,136 4,371,258

Office rental and maintenance 7,885,590 7,207,161

Publications and membership fees 240,167 215,535

Replacement of field equipment and consumables 5,664,102 5,077,420

Stationery 1,159,924 923,456

Telephone, fax and postage 2,127,741 2,158,476

Training 6,016,105 5,044,228

Travelling and subsistence 34,054,563 28,742,899

Travel - overseas 562,109 698,042

Wasteful expenditure 2,994 382,137

84,446,913 74,710,433

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16. Employee Compensation and Benefits

2015 2014

Salaries and wages 163,826,385 140,205,151

Defined contribution costs - retirement fund 12,862,324 11,151,346

176,688,709 151,356,497

17. Investment Revenue

Interest revenue 2015 2014

Interest revenue - bank 4,223,271 4,502,142

18. Finance Costs

2015 2014

Finance charges 1,173 13,007

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19. Cash Used in Operations

2015 2014

Deficit (9,688,932) (2,396,507)

Adjustments for:

Movements in provisions 954,352 1,041,387

Depreciation 2,374,398 1,963,574

Changes in working capital:

Trade and other receivables (3,890,760) (3,312,919)

Trade and other payables 1,713,973 2,126,172

(8,536,969) (578,293)

20. Auditors' Remuneration

2015 2014

Fees 431,938 321,466

21. Taxation

No provision for tax has been made, as the Board is not subject to normal tax. Refer to the Income Tax Act (Act 58 of 1962), Chapter 2, Part 1, Section 10, (1), (cA), (i), (bb).

22. Board Members' Emoluments

Fee Other Total 2015 Total 2014

Dr CPR Cronje - - - 38,483

Mr DN Hamman - - - 30,184

Ms Z Maubane - - - 38,869

Mr H Phasha - - - 48,816

Ms M Rademan - - - 48,690

Mr DJ Van Zyl Smit - - - 19,166

Ms CH Engelbrecht 98,277 1,102 99,379 51,133

Mr TW Reddell 56,972 - 56,972 36,893

Ms J Atwood-Palm 95,612 20,847 116,459 56,797

Ms CL Kutta 86,274 943 87,217 48,352

Dr MJ Mashaba 158,040 19,936 177,976 87,017

Mr A Petersen 298,712 4,940 303,652 69,374

Mr A Rabe 65,707 6,667 72,374 64,062

Ms E Scholtz 95,612 4,858 100,470 86,274

Mr W Steenkamp 121,770 1,221 122,991 69,160

Mr D Westcott 86,274 12,848 99,122 72,498

1,163,250 73,362 1,236,612 865,768

KEY MANAGEMENT COMPENSATION

2015 2014

Salaries 10,092,220 10,302,286

Defined contribution costs - Retirement fund 1,781,214 1,158,750

11,873,434 11,461,036

The increase in board emoluments is as a result of the board providing additional auxiliary support to the Acting CEO and management team with the resignation of the CEO. The board sub-committees had to be re-organised and strengthened with the resignation of Tim Reddell to ensure the availability of appropriate skills to the various board sub committees.

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23. Related Parties

The PPECB has related party relationships with the Department of Agriculture, Forestry and Fisheries (DAFF), members of the board and the management committee. The DAFF has significant influence. Services delivered to related parties are on terms of business normally prevailing with third parties.

The PPECB rendered services of R14,526,751 (2014: R23,088,936) to companies on which some of the members of the board serve. The outstanding debtors' balances of these companies totalled R980,616 (2014: R1,760,373).

RELATED PARTY BALANCES

2015 2014

Board members

Mr LL Vorster - Westfalia Fruit Products - 5,957

Mr LL Vorster - Westfalia Marketing Pty Ltd - 218,917

Mr LL Vorster - Westfalia Estates - 693

Mr TW Reddell - Viking Fishing Co. 15,123 15,040

Ms M Rademan - Aspen International Pty Ltd - 406,233

Ms M Rademan - Colors Fruit SA Pty Ltd - 38,407

Ms M Rademan - Colors Fruit SA Pty Ltd - 2,560

Mr D Westcott - C Tabanelli 1,448 -

Mr A Petersen - Capespan South Africa Pty Ltd 964,177 1,068,722

Ms E Scholtz - Farmacres 25 Pty Ltd (132) 3,844

Mr A Rabe - Proteus Logistics Pty Ltd - 1,006

980,616 1,761,379

Department of Agriculture, Forestry and Fisheries

SA PIP Project - Interest on bridging funds 895,058 895,058

Joint Venture - Training & Development (refer note 25) 584,787 1,940,029

1,479,845 2,835,087

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2015 2014

Board members

Ms CH Engelbrecht - The Piet Engelbrecht Trust 208,949 329,552

Ms CH Engelbrecht - Van Doorn SA - 141,627

Mr LL Vorster - Westfalia Fruit Products - 20,144

Mr LL Vorster - Westfalia Marketing Pty Ltd - 1,901,970

Mr LL Vorster - Westfalia Estates - 22,004

Mr DN Hamman - SA Table Grape Industry - 355,908

Mr TW Reddell - Viking Fishing Co 138,514 129,928

Ms M Rademan - Aspen International Pty Ltd - 3,809,726

Ms M Rademan - Colors Fruit SA Pty Ltd - 1,065,124

Mr D Westcott - C Tabanelli 124,093 108,254

Ms E Scholtz - Farmacres 25 Pty Ltd - 3,844

Mr A Petersen - Capespan South Africa Pty Ltd 14,260,043 15,115,983

Mr A Rabe - Hortgro Services - 84,871

Mr A Rabe - Proteus Logistics Pty Ltd 50,845 109,783

14,782,444 23,198,718

Department of Agriculture, Forestry and Fisheries

AETP Programme 600,000 600,000

Joint Venture - Training & Development (refer note 25) 1,793,838 -

2,393,838 600,000

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24. Fruitless and Wasteful Expenditure

2015 2014

Medimark Marketing CC write off (1) - 382,137

Fictitious payments processed (2) - 28,000

Recovered fictitious payments (2) - (28,000)

Change in air tickets (3) 2,994 -

2,994 382,137

1. The expenditure of R382,137 relates to a supplier Western Icon CC trading as Medimark Marketing CC (Registration number: 2002/037445/23). Medimark Marketing CC is a BEE supplier, and based on past experience, was considered reliable and trust-worthy. The PPECB awarded a tender to Medimark Marketing CC to supply 49 laptops. Upon delivery of 14 laptops, they requested a pre- payment to assist them in securing the additional 35 laptops from their supplier, due to cash flow difficulties. A pre-payment was made, but the supplier failed to deliver the laptops.

2. During the prior year, invoices amounting to R28,000 were fictitiously processed. Disciplinary measures were instituted to recover this amount, and the amount was recovered in full. Internal control measures have been strengthened to prevent a future recurrence.

3. Two employees missed their air flights, resulting in the additional costs of R2,994 being incurred.

25. Commitments

OPERATING LEASES - AS LESSEE (EXPENSE)

Minimum lease payments due

2015 2014

- within one year 3,546,423 3,459,352

- in second to fifth year inclusive 11,123,778 9,571,407

- later than five years 843,729 2,806,180

15,513,930 15,836,939

JOINT VENTURE - DEPARTMENT OF AGRICULTURE, FORESTRY AND FISHERIES

2015 2014

Training and development programmes 2,584,787 1,940,029

2,584,787 1,940,029

In the prior year, the PPECB entered into a Joint Venture agreement with the Department of Agriculture, Forestry and Fisheries (DAFF) in relation to various training and development programmes to be held. The total estimated project value is R4,711,633 (incl. VAT), of which the PPECB has received R2,711,633 (incl. VAT) to date. During the year, the DAFF further committed to annual payments of R500,000 up until June 2020. The PPECB will co-fund the programmes.

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26. Contingencies

No material contingencies were identified in the year under review.

27. Irregular Expenditure

2015 2014

Opening balance 4,275,000 -

Bid for development of mobile technology platform (contract value incl. VAT) - 4,275,000

Condoned during the year (4,275,000) -

Awaiting acceptance from the board - (4,275,000)

Emergency repairs to generator 37,206 -

Condoned during the year - -

Awaiting acceptance from the board (37,206) -

- -

In the prior year, a public invitation for competitive bids was advertised for a period shorter than the required 21 days, and the approval of deviation was not recorded with SCM Policy requirements. The board condoned the irregular expenditure on 27 May 2014.

In the current year, only one quote was obtained to have emergency repairs conducted, after a power outage resulted in extensive damage to the main generator. Due to the urgent nature of the repairs, prior approval was not obtained from the CEO, which is a deviation from Treasury Regulations.

28. Statement of comparison of budget and actual amounts

Approved budget

Actual amount

Variance Explanation

Rendering of services 240,316,459 246,081,594 5,765,135The positive variance is due to improved income from inspection services of R6,9m and cold chain services of R4,5m offset by lower income from the laboratory of R5,6m.

Other income 2,150,000 1,142,998 (1,007,002)The negative variance is mainly due to lower than anticipated income from the student / smallholder farmer training programme.

Investment revenue 5,353,957 4,223,271 (1,130,686) The negative variance is due to lower cash reserves available for investment.

Total income 247,820,416 251,447,863 3,627,447

Employee costs (172,127,584) (176,688,709) (4,561,125)

The negative variance is due to a lower than budgeted vacancy rate, coupled with additional permanent and contract staff appointments to manage higher product volumes and citrus black spot risks, and amounts to R3,4m. Also, an increase in the leave provision at year-end of R1,2m, is mainly due to revised salary grades for certain employees.

Depreciation (3,564,765) (2,374,398) 1,190,367The positive variance is due to the Capex budget not fully utilised, coupled with the fact that significant purchases were done in the latter part of the year.

Finance costs - (1,173) (1,173)

Activity costs (29,430,191) (30,464,825) (1,034,634)The negative variance is due to some fruit seasons being earlier and longer than anticipated, resulting in overruns on budgeted kilometre cost of R0,6m, and assessor accommodation costs of R0,4m.

Computer expenses (6,723,206) (8,464,723) (1,741,517)The negative variance is due to additional development and implementation costs incurred on the electronic certification/ tablet project.

Training (5,529,120) (6,016,105) (486,985)The negative variance is mainly due to unbudgeted costs incurred on an ARC Project, which was refunded under income.

Administration (41,137,015) (37,126,862) 4,010,154The positive variance is due to savings on meetings, workshops and administrative travel of R1,1m, postage and telephone of R1,1m, consultancy fees of R0,9m, corporate identity costs of R0,7m, and other costs of R0,2m.

Deficit (10,691,465) (9,688,932) 1,002,534

PART A : STRATEGIC OVERVIEW 79

1. CONTEXTUAL ANALYSIS 79

2. VISION, MISSION, VALUES 81

3. LEGISLATIVE AND POLICY MANDATES 81

4. POLICY MANDATES 81

5. SITUATIONAL ANALYSIS 81

6. STRATEGIC OUTCOME ORIENTED GOALS 84

PART B : PROGRAMME OVERVIEW 85

1. PROGRAMME 1: CORPORATE SERVICES 85

2. PROGRAMME 2: OPERATIONAL SERVICES 85

3. PROGRAMME 3: FOOD SAFETY SERVICES 86

4. PROGRAMME 4: TRANSFORMATION AND DEVELOPMENT SERVICES 86

PART C : RISK MANAGEMENT 89

PART D : ORGANISATIONAL PERFORMANCE TARGETS 91

CONCLUSION 92

STRATEGIC PLAN2015 TO 2020

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PART A : STRATEGIC OVERVIEW

1. Contextual Analysis

In President Jacob Zuma's State of the Nation address on 17 June 2014, the need to embark on

a radical socio-economic transformation to push back the triple challenges of poverty, inequality and unemployment was emphasised. The decision to embark on radical transformation was powered by the widely researched National Development Plan (NDP) that now serves as the blueprint for economic development in South Africa.

The transformation programme referred to above will be bolstered by the implementation of the Industrial Policy Action Plan (IPAP), of which the Department of Agriculture, Forestry and Fisheries' (DAFF) 'soon to be released' Agricultural Policy Action Plan (APAP) is a customised derivative. Agriculture was identified in the State of the Nation address as the key job driver of the South African economy, with the target of 1 million jobs to be created in this sector by 2030.

Government is to provide comprehensive support to smallholder farmers by speeding up land reform and providing technical, infrastructural and financial support.

Food production and subsistence farming will be stimulated to promote food security. In the same breath, economic development, trade and investment partnerships will need to be expanded, particularly along the axis of the BRICS countries and the African continent.

Government must engage with the private sector to promote

inclusive growth in the economy.

Youth empowerment and women empowerment will be prioritised, with public entities absorbing

this profile of interns for experiential training.

The President concluded his State of the Nation address by stating that each Minister would be required to sign a performance agreement with the President that outlined what needed to be delivered to achieve this socio-economic transformation. It underscored the need for accountability throughout Government. President Zuma also asked all South Africans to dedicate their 67 minutes on 18 July to clean South Africa - the theme this year in remembrance of Nelson Mandela.

In Minister Senzeni Zokwana's inaugural address to the CEOs of the DAFF's State Owned Entities (including the PPECB) on 24 June 2014, he accentuated, amongst other things, the following:

» Whilst he respected and appreciated what we were doing as public entities, he categorically emphasised that it was a futile exercise unless people on the ground were benefitting from our efforts;

» He requested that we stop competing with each other (thereby duplicating efforts and costs), and start collaborating with one another as a DAFF team;

» Food security - implying at least one meal a day - for the poor in our country was critical, and anything we could do to alleviate this scourge in our society was seen as critical;

» He stressed the need to help emerging farmers access new markets (particularly local markets, with government institutions possibly procuring their products), and to help the commercial sector in opening more markets to ensure growth in the production of food;

» He emphasised that public entities promote inclusive growth by creating jobs for the youth, and for women in particular. The need to make the agricultural industry more attractive to the youth was considered a major challenge by both Minister Zokwana and Deputy Minister General Cele; and

» He suggested building relationships with stakeholders, and making the private sector part of the solution to the country's challenges.

In the DAFF's Medium Term Strategic Framework (MTSF) planning session of 2 July 2014, the Director General of Agriculture, Professor Edith Vries - along with her Provincial Heads of Departments, public entity CEOs and DDGs - unpacked Minister Zokwana's interpretation of the President's State of the Nation address. The next five-year plan (2015/16 to 2019/20) should, amongst other things, carry the following priorities:

» To achieve the government's priorities, 14 Presidential Outcomes linked to the NDP were identified for implementation during this administration. DAFF - and by implication the PPECB - contributes importantly to Outcomes 4, 7 and 10.

» Provinces need to engage much closer with their municipalities, as the failure of delivery at municipal level could lead to protests - with food riots being a very real threat to the stability of rural communities in future.

» Agricultural extension services across the country have largely fallen into disrepair. This is seen as a vital service for the resuscitation of agriculture from municipal level upwards in the country.

» Skills development, job creation and food production are considered the pillars of agriculture over the next five years. All agricultural institutions are also encouraged to tell of the 'good stories' occurring across the country in this regard.

» The following issues were strongly encouraged: stakeholder engagement; inter-governmental cooperation; thought leadership by the State Owned Entities (SOEs) in particular; the incorporation of women and youth in agriculture; promoting agriculture as an attractive career; and close interaction with the private sector.

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» The DAFF is a policy maker and a monitor of that policy. More should be given to the SOEs and National Public Entities (NPEs) to implement on behalf of the DAFF.

This strategic plan remains mindful of the fact that the PPECB is assigned in law to specifically execute two mandates. Firstly, the inspectorate at the PPECB is required to assess the quality of export products put before it as part of its daily tasks across the country. Secondly, the cold chain inspectors need to assess the facilities and equipment in the export value chain to ensure that minimum standards are adhered to.

The PPECB's cold chain assessors are also required to monitor the temperature regimes of products leaving the country - to prevent products from perishing en route to the markets, thereby risk ing significant financial loss to the country. Consequently, the PPECB's export certifi cation process is the litmus test in ensuring that all export products achieve the minimum standards required to uphold South Africa's reputation abroad.

The newly appointed PPECB Board members expressed their strategic wishes of the PPECB in a recently held strategic planning session. Stakeholder symmetry was identified as being key, i.e. aligning the PPECB's mandate with the needs of its clients. If not implemented, the PPECB faces the very real prospect of becoming irrelevant in the future.

The Board also decided that in its three-year term, it wanted the PPECB to reflect the following: a stable platform off which the PPECB family could operate effectively and efficiently; a people-focused organisation culminating in being an employer of choice; a relevant, customer-centric organisation that could unlock value-added services for its clients; and an Executive Management team that demonstrated agile leadership. The big-ticket, strategic items identified at the Lekgotla were:

» The way forward for the PPECB's laboratory, observing statutory and user-pay principles, food safety, potential growth areas, and a five-year business plan;

» Business transformation and the need to coordinate various areas of the PPECB's business into being a relevant and sustainable entity;

» Research and development at the PPECB being converted essentially into a portfolio of innovation; and

» The importance of delivering mobile technology solutions to clients, thereby taking certification and information provision to an entirely new level in the organisation.

Finally, the PPECB as an organisation needs to evolve with the times. The CEO and his General Management team need to ensure that the PPECB remains an employer of choice; that it adopts current technology to streamline its operations; that it adheres to the Public Finance Management Act (PFMA) and the corporate governance expected of it as a National Public Entity; that it remains financially sustainable in a volatile agricultural environment; that it addresses the social obligations of a developmental state; and that it meets and exceeds the expectations of its fee-paying customers.

The accompanying strategy is therefore required to address all of the above issues that encompass the PPECB as an ongoing business concern.

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2. Vision, Mission, Values

The VISION of the PPECB is to enable its customers to become the preferred suppliers of perishable

products worldwide.

This vision is supported by the PPECB's MISSION to empower its people to execute their mandates so as to give integrity to their customers' products.

This mission is further underpinned by the PPECB VALUES of:

PROFESSIONALISM

We aspire to doing the job right the first time, while displaying a positive attitude towards our relationships with our clients, colleagues and stakeholders.

ACCOUNTABILITY

We proactively assume responsibility for all our deliverables and areas of influence. This is done by creating and maintaining an environment that fosters guidance and empowerment of the employees to take ownership of their actions.

PASSION

We are driven and committed to continually serve our stakeholders with energy and enthusiasm.

INTEGRITY

We uphold the highest standards of honesty, impartiality and confidentiality in the execution of our duties, services and stakeholder relationships.

CONFIDENCE

We believe in our people, processes, proficiency and in-depth knowledge, which enable us to deliver our duties and services with conviction and excellence.

COLLABORATION

We actively engage in building and maintaining relationships in which we share information and exchange innovative ideas with all stakeholders.

3. Legislative and Policy Mandates

The PPECB is governed by the Perishable Products Export Control Act 9 of 1983 and the Agricultural Product Standards Act 119 of 1990. In terms of this legislation, the PPECB is responsible for overseeing the export of perishable produce. This is achieved through the inspection of listed agricultural products, food safety certification and management of the cold chain.

Both the PPEC Act and the APS Act are currently under review, but have not yet been finalised. The PPECB is hopeful that the amended legislation will be passed by Parliament during the latter part of 2015. To date, there have been no significant changes to legislation impacting directly on the mandate of the PPECB.

4. Policy Mandates

Informed by the National Growth Path (NGP) and the National Development Plan (NDP), the Medium Term Strategic Framework (MTSF) places great emphasis on small farmer development and rural employment, among other things.

As subject matter experts for the inspection of listed agricultural products,

and the management of the cold chain and food safety certification targeted at the export market, the PPECB is committed to supporting Government in achieving these objectives.

The PPECB has formulated policies that will promote and facilitate the achievement of these objectives, and has further introduced programmes directing organisational resources accordingly.

5. Situational Analysis

5.1 EXPENDITURE FRAMEWORK

The 2015/16 budget is informed by four main drivers, namely:

1. The delivery of statutory services;

2. The execution of the Board-approved strategic plan;

3. The mitigation of the main risk areas in the PPECB's service delivery priorities and;

4. Moving towards electronic export certification.

The spending focus over the medium-term will be on continued service delivery without compromising the integrity of product quality, and continued contribution towards social responsibility in building capacity and assisting smallholder farmers as well as focusing on establishing a professional and well trained staff compliment that can add value to the perishable export industry.

EXPENDITURE TRENDS

Between 2011/12 and 2014/15, total expenditure grew by 8.4%, from R202.4 million to R258.1 million. The increases reside in employment, travel and accommodation costs, all of which increased annually in excess of Consumer Price Index (CPI), coupled with continued pressure to increase staff resources to ensure compliance to the mandate.

From 2014/15, expenditure is set to increase for the next five years by an average annual rate of 10.4% to R424 million in 2019/20. It is assumed that the activity base used in 2015/16 will track the growth in exports. The activity base refers to the operational resources deployed, kilometres travelled, and relief duty days. Computer expenses increased by an average of 12% due to the introduction of mobile technology in the PPECB's business.

Depreciation is based on an annual CAPEX replacement in technology of R4 million per year,

and written off over a five-year period.

REVENUE TRENDS

It is assumed that total income will increase by 11% over the next five years. The 11% increase is based on an initial 8% inflationary adjustment to levies, but then reduced to 7% in the last three years. A 3% growth rate in product volumes is expected.

Statutory citrus inspections are estimated to increase by 2% per annum, and deciduous fruit inspections by 3% per annum. A 3% growth is assumed for all other products and services. Interest income is assumed to marginally reduce due to shortfalls in the first two years. Interest rates are expected to remain firm.

PERSONNEL INFORMATION

The period ending 2019/20 is informed by the two major objectives above, namely fulfilment of the mandate from Government and execution of the strategic plan approved by the Board. Over the past decade, the PPECB became increasingly under- resourced to meet these objectives.

The period ending 2019/20 will continue to address human resource constraints to ensure that the PPECB meets its mandate and strategic goals. Employment cost of R172 million in 2015/16 is set to increase to R283 million over the five years, which is an average of 10.5%. Salaries, including promotions, are adjusted by an average of 6% per annum, and growth in employment is 4.5%. The PPECB is a service-oriented entity, and as such 67% of total expenditure comprises personnel costs. The vacancy rate is kept at 6% of total staff over the five-year period.

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Perishable Products Export Control Board MTEF for the period ending March 2020

5.2 ORGANISATIONAL PLANNING PROCESS

Statement of Financial

PerformanceAudited outcome

Revised Estimate

Average

Growth

Rate %

As % of Total %

Medium-term estimate

Average

Growth

Rate %

As % of Total %

R thousand 2011/12 2012/13 2013/14 2014/15 2011/12 - 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2014/15 - 2019/20

REVENUE

Sale of goods

and services180,085 189,998 217,678 247,504 11.2% 97.4% 280,027 314,386 348,192 381,510 417,991 11.0% 98.4%

Interest

received5,405 4,469 5,405 5,000 -2.6% 2.4% 4,630 4,537 4,492 4,537 4,582 -1.7% 1.3%

Transfers

received600 600 600 600 0.0% 0.3% 970 1,019 1,069 1,123 1,179 14.5% 0.3%

Total revenue 186,090 195,067 223,683 253,104 10.8% 100.0% 285,627 319,942 353,754 387,170 423,753 9.40% 100.0%

EXPENSES

Compensation of

employees 137,703 135,326 151,356 171,953 7.7% 67.5% 195,386 215,394 237,450 259,248 283,047 10.5% 67.0%

Goods and

services 62,994 59,443 72,212 82,606 9.5% 31.4% 90,634 99,915 110,146 121,425 133,859 10.1% 31.3%

Depreciation 1,685 1,528 2,499 3,565 28.4% 1.1% 5,589 5,924 6,280 6,657 7,056 14.6% 1.8%

Interest paid 24 13 13 10 -25.3% 0.0% 10 10 10 10 10 0.0% 0.0%

Total expenses 202,406 196,310 226,080 258,134 8.4% 100.0% 291,619 321,243 353,886 387,339 423,972 10.43% 100.0%

Surplus/(Deficit) -16,316 -1,243 -2,397 -10,313 -14.20% -5,992 -1,301 -132 -170 -219

MTSFPPECB

Environmental Scan

PPECB Board Objectives

PPECB Strategic Objectives

PPECB KPAs and KPIs

PPECB Performance Reporting

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5.3 MONITORING AND EVALUATION

The PPECB monitors and evaluates its performance against pre-determined objectives listed per sub-programme. Although progress against stated targets is reported quarterly, monthly divisional discussions are held regarding performance progress. Organisational performance reports are escalated to executive meetings, and get approved by the Board before submission to the Executive Authority.

Great emphasis is placed on evidence-based monitoring, which gets audited on a regular basis. The PPECB currently uses a manual reporting system, coordinated by the General Manager: Corporate Affairs.

6. Strategic Outcome Oriented Goals

The PPECB has defined the following three key strategic objectives:

» Strategic Objective 1 (SO1): Enhancing the credibility of the South African export certificate;

» Strategic Objective 2 (SO2): Supporting the export competitiveness of South Africa's perishable products industries; and

» Strategic Objective 3 (SO3): Strengthening the PPECB's capacity to provide a professional suite of services for its customers.

These strategic objectives have further been linked to strategic programmes that will drive the achievement of the organisation's mission and vision.

Below is a tabular illustration of the respective programmes linked to the organisational strategic objectives:

Strategic Objective (SO) Programmes

(SO1) Enhancing the credibility of the South African export certificate Programmes: 1, 2, 3 and 4

(SO2) Supporting the export competitiveness of South Africa's perishable

products industriesProgrammes: 3 and 4

(SO3) Strengthening the PPECB's capacity to provide a professional suite

of services for its customersProgrammes: 1 and 2

PART B : PROGRAMME OVERVIEW

The PPECB's strategy is driven and executed by four main programmes. These programmes are:

1. Programme 1: Corporate Services

The purpose of the Corporate Services Programme is to support, provide direction and leadership, instil corporate discipline, and promote the services of the PPECB.

The programme comprises of units that include: Finances, Human Resources, Marketing and Commu-nications, Legal and Governance, Information and Communications Technology, Innovation and Research, and Business Certifications.

The Corporate Services Programme operates cross- functionally with the primary aim of delivering professional support services to the whole of the PPECB. The programme further plays an essential role in ensuring coherence among the respective business units within the PPECB.

1.1 THE MAIN PROGRAMME DELIVERABLES ARE:

» To provide strategic direction to the organisation;

» To ensure service alignment with relevant stake-holder expectations;

» To seek and identify opportunities to improve service delivery and customer satisfaction;

» To promote and protect the PPECB brand;

» To provide the necessary business infrastructure;

» To instil a culture promoting Batho Pele;

» To ensure adherence to sound financial and governance practices;

» To improve the organisation's Corporate Social Responsibility portfolio;

» To ensure seamless mobility infrastructure and ICT Governance; and

» To harness technology to deliver better services.

1.2 BASED ON THE LISTED DELIVERABLES, THE PROGRAMME IS COMMITTED TO ACHIEVING THE FOLLOWING OUTCOMES OVER THE MEDIUM TERM:

» Formulate and submit a PPECB strategy aligned with the Government imperatives and stake-holder expectations;

» Obtain ISO 9001:2008 certification and level 4 B-BBEE verification;

» Successfully migrate from a manual to an automated inspection system;

» Introduce systems and processes that promote sound financial and governance practices without hampering business efficiency;

» An integrated approach to innovation that acts as a catalyst for business transformation;

» A clear shift in organisational culture that compliments the values of the PPECB; and

» Increase spend on Corporate Social Initiatives.

2. Programme 2: Operational Services

The PPECB Operational Services Programme is responsible for delivering integrated inspection and cold chain services for the export market. This programme is divided into three functional areas, namely; North, South and Coastal. The aim of the programme is to deliver an effective and efficient service to all PPECB stakeholders. The programme is further committed to ensuring achievement of the PPECB's strategic objectives.

2.1 PRIORITY AREAS

» Ensuring compliance and alignment with all relevant legislation that affects the PPECB and its operational mandate;

» Building and maintaining a high performance workforce that is multi-skilled, accountable, competent, innovative, consistent and uniform;

» Rendering an integrated cost-effective service to customers;

» Collaborating closely with all stakeholders to maintain relationships and client confidence in the PPECB and its processes; and

» Providing stakeholders with information that is accurate and timeous.

2.2 MEASURABLE OBJECTIVES

The successful implementation of the programme will be measured against the following objectives:

» Maintaining the required sampling frequency with regard to our mandate;

» Implementing and maintaining proper procedures for enhancing the credibility of the South African Export Certificate and Carrying Temperature Instructions;

» Adherence to the Service Level Agreement (SLA) targets;

» Implement policies and procedures aligned with the requirements of ISO 9001: 2008;

» Ensuring completeness of income;

» Client feedback, with responses that are timeous and accurate; and

» An engaged and satisfied staff, creating a culture of performance and care.

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3. Programme 3: Food Safety Services

Food safety refers to the assurance that food will not cause harm to the consumer when prepared and/or eaten according to its intended use. Section 2(1) of the Foodstuffs, Cosmetics and Disinfectants Act, 1972 (Act 54 of 1972) prevents any person to introduce to international trade any food that is unfit for human consumption. The Agricultural Products Standards Act 119 of 1990 controls and promotes specific product quality standards for the local market and for export purposes.

It is administered and enforced by the Directorate: Food Safety and Quality Assurance in the Department of Agriculture, Forestry and Fisheries (DAFF). With respect to food safety, the Perishable Products Export Control Board has been appointed and is authorised to conduct food safety audits (Regulation 707), test groundnuts for aflatoxins (Regulation 1145 relating to tolerance for fungus-produced toxins in foodstuffs) and conduct compositional testing of dairy products (Regulation 2581 relating to dairy products and imitation dairy products) destined for the export market.

3.1 PRIORITY AREAS

» Ensuring consistent production of safe and quality products by reducing risks of compromised food quality;

» Maintaining consumer (local and international) confidence in food safety and quality by using reliable, advanced and rapid technologies in testing quality characteristics of food to ensure compliance, and testing mycotoxin tolerance levels, pesticide residues and microorganisms;

» Promoting safe production practices for growers through food safety audits, and strengthening national food safety systems; and

» Reducing the negative impact on the environment by ensuring compliance with relevant regulations.

3.2 MEASURABLE OBJECTIVES

» To strengthen national food control systems;

» To facilitate active collaboration between stakeholders;

» To provide an ISO 17025 accredited Pesticide Residue Testing [Maximum Residue limit (MRL)] and dairy testing service in foods and feeds to ensure food safety compliance and quality;

» To test for all pesticides as per the regulations of South Africa and the EU with a lead time of 48 hours from sample receipt;

» To increase the scope of mycotoxin and dairy analyses to meet customer needs in line with R. No. 1145 (Foods), R. No. 2581 (Dairy) and R. No. 1087 (Feeds);

» To strengthen core competencies of lead times, workflow processes and in-house developed methodology; and

» To offer a one stop shop for food and feed safety testing.

4. Programme 4: Transformation and Development Services

The transformation and development services programme is aimed at building capacity through the development of internal and external skills. The programme includes the following initiatives:

4.1 INTERNSHIPS AND LEARNERSHIPS

The PPECB has in the past eight years offered a learnership at NQF level 5, exposing learners to the post-harvest agricultural value chain, thereby providing them with a head-start in advancing themselves professionally in this sector. It is the PPECB's aim to continue with this initiative, and to take this to a higher level by partnering with institutions like the Cape Peninsula University of Technology (CPUT) which will assist in enhancing the qualification students obtain at the PPECB. The leanership programme is provided in partnership with the DAFF and the AgriSeta.

In collaboration with the AgriSeta, the PPECB

is further providing on the job exposure in fields like Information and

Communications Technology (ICT), Finance, Human Resources and Marketing.

4.2 INTERNAL CAPACITY BUILDING

The PPECB puts a lot of emphasis on the area of capacity building. It provides development opportunities for both internal and external stake-holders. With regards to internal stakeholders, the focus is on women and youth empowerment. Leadership development initiatives are being put in place to ensure that the advancement of women is accelerated so that they can assume leadership roles, as these are currently predominantly occupied by their male counterparts.

The PPECB strives to be a learning institution, and is leveraging technology to ensure that training provided meets the needs of the modern generation. This has resulted in the introduction of a Learning Management System with online on-boarding. There is also a huge focus on coaching and mentoring to ensure that the youth entering the workplace are empowered to provide customer service with confidence.

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Over and above the training, coaching and mentoring that we provide for our internal stakeholders, we

also have a dedicated programme for ensuring uniform interpretation and consistent application of standards during the execution of product inspection, cold chain functions and food safety audits.

The harmonisation programme aims at mitigating the risks related to incorrect decision making during inspections and cold chain functions, and enhances the confidence levels of employees and associated clients during service delivery.

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PPECB EMPLOYEES HAVE ENVIABLE EXPERTISE IN QUALITY STANDARDS

4.3 EXTERNAL CAPACITY BUILDING

The Development unit focuses mainly on smallholder farmer development. The unit's services aim to expose smallholder farmers to food safety, good agricultural practices, responsible use of pesticides, cold chain management and product quality training in preparation for food safety certification and market access.

Development initiatives are run on a collaborative basis with the DAFF, the Department of Agriculture Western Cape, the Agricultural Research Council (ARC) and the National Agricultural Marketing Council (NAMC), and service all provinces in South Africa. Collaboration not only extends to sister State Owned Enterprises (SOEs) but also to commercial development partners like Citrus Research International (CRI) as well as Further Education and Training Colleges like Fort Cox agricultural college in the Eastern Cape.

Since the PPECB exited the certification of private standards arena, it is free to train farmers - especially smallholder farmers - in matters pertaining to such private standards as well as on its mandated R707 (SAGAP). With there being no possible conflict of interest as the facilitators will not be the auditors.

The PPECB employees have enviable expertise in quality standards, food safety and cold chain management in particular, and it plays to its strength as an organisation in imparting that knowledge. The PPECB's mandate and resources are limited when it comes to providing a stand-alone training function, so it is imperative that the organisation performs this important function in a collaborative fashion.

4.4 MEASURABLE OBJECTIVES OF THE PROGRAMME:

» Raise external donor funds for the running of the Development programme;

» Increase the product offering of development initiatives; and

» Build capacity in externally targeted groupings by transferring knowledge and skills.

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PART C : RISK MANAGEMENT

The PPECB's role is to instil confidence in the international community that the food delivered

as a result of PPECB's quality assurance programme meets the expected standard, and is safe to eat. The emphasis is on the PPECB to reduce or control any liability that may arise from professional errors or non-performance around the organi sation's mandate.

The PPECB needs to manage an array of risks that present themselves annually to the organisation. While some are predictable, others can take the organisation by surprise. For this reason, the PPECB has developed policies, committees and overall management structures to monitor that risks do not place the organisation in jeopardy.

The Board of Directors has primary responsibility for overseeing risk management and risk assessment across the PPECB. In accordance with the Public Finance Management Act 1 of 1999, the Board of Directors of the PPECB recognises that it is obliged to protect the organisation, people and assets against the adverse consequences of risk, with a view of ensuring that objectives are met. These key objectives include:

Delivering on the mandate delegated by the DAFF to the PPECB;

» Protecting the reputation of the PPECB;

» Furthering good corporate governance within the organisation;

» Developing and growing relationships with PPECB's stakeholders;

» Protecting and developing the PPECB's employees and the organisation's intellectual property; and

» Protecting the assets of the public entity.

Management is responsible for designing, implementing and monitoring the effective functioning of system internal controls. The Risk Management Committee (RISCO) has been established by the PPECB to support the Chief Executive Officer and its General Managers in monitoring risk by reviewing the effectiveness of the PPECB's risk management systems, practices and procedures, and providing recommendations for improvement. The top risks are addressed through action plans that identify individuals responsible for the known risks.

The following are broad areas of risk relevant to the PPECB:

» Strategic risks;

» Compliance risks;

» Operational risks;

» Financial risks;

» Stakeholder risks;

» Business processes risks;

» Technology risks;

» People risks;

» Social, environmental and economic responsibility risks; and

» PPECB laboratory risks.

The PPECB's internal audit department oversees the risk process from a strategic perspective. The independent, external financial auditors and internal auditors check for the robustness and thoroughness of risk management within the PPECB, and report independently on such risk matters. The assessment methodology takes into account the severity and probability of risk occurring,

including the ranking and prioritisation of identified risks. The top risks are addressed through action plans that identify individuals responsible for the known risks.

Risks can vary depending on the nature, scope and size of the business matter involved. Importantly, the threat to the integrity of the business as a growing concern must be considered, including the potential collateral damage (reputational and otherwise) to all of the PPECB's stakeholders.

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INTERNAL AUDITORS CHECK FOR THE

ROBUSTNESS AND THOROUGHNESS

OF RISK MANAGEMENT

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Below is an extract of the five major risks that may impact the PPECB:

Risk Impact Probability Inherent Control ResidualTolerance

Level

[A] [B] [C]=[A]x[B] [D] [E]=[C]x[D]

Integrity of the export certificate 10 7 70 10% 63 10

Unsustainable operational and business model

8 8 64 10% 58 20

Lack of oversight on critical business processes

7 10 70 20% 56 10

Non-compliance to APS mandate 7 10 70 20% 56 10

Insufficient IT infrastructure 8 7 56 20% 45 10

INTERNAL AUDITORS CHECK FOR THE

ROBUSTNESS AND THOROUGHNESS

OF RISK MANAGEMENT

PART D: ORGANISATIONAL PERFORMANCE TARGETS

The PPECB has identified the following key performance areas and key performance indicators for the period 2015 to 2020.

Programme performance indicators and annual targets

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Programme 1: Corporate Services Targets 2015-2020

Output (KPA) Indicator (KPI) 2015/2016 2016/2017 2017/2018 2018/2019 2019/2020

Business transformation

% of money spent on B-BBEE suppliers

70% 75% 77% 78% 80%

Informed and satisfied stakeholder base

% of information provided at a 95% accuracy level in week 1 of reporting

92% 93% 94% 95% 98%

Organisational customer satisfaction index measured annually

70% 75% 80% 80% 85%

Skills retention % of staff retained annually 94% 94% 94% 94% 94%

Programme 2: Operational Services Targets 2015-2020

Output (KPA) Indicator (KPI) 2015/2016 2016/2017 2017/2018 2018/2019 2019/2020

Compliance

Number of samples inspected on a 2% basis

95% 96% 97% 98% 99%

% of accurate temperature letters issued in relation to the number of vessels sailed

100% 100% 100% 100% 100%

Efficient service delivery

Number of clients submitting electronic requests for export certificates via the PPECB mobile technology platform

20 50 150 300 400

Number of activity points interfacing with the PPECB mobile technology platform

200 400 800 1,000 1,300

Programme 3: Food Safety Services Targets 2015-2020

Output (KPA) Indicator (KPI) 2015/2016 2016/2017 2017/2018 2018/2019 2019/2020

Food safety assurance

Number of samples analysed using accredited methods

18,000 20,000 22,000 24,000 26,000

Number of food safety audits conducted

700 720 750 800 850

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Programme 4: Transformation and Development Services

Targets 2015-2020

Output (KPA) Indicator (KPI) 2015/2016 2016/2017 2017/2018 2018/2019 2019/2020

Capacity building

Number of students graduated through the AETP programme

25 30 35 40 45

Number of smallholder farmers trained

120 120 150 170 200

Competent staff% of operational staff verified as competent by the harmonisation programme

80% 85% 90% 90% 95%

Market accessNumber of smallholder farmers certified for export

5 5 10 10 15

CONCLUSION

Classified as a National Public Entity by the Public Finance Management Act 1 of 1999 and mandated to oversee the export of perishable produce, the PPECB's core services are targeted at the export value chain. However, as a government entity, the PPECB is further committed to assisting Government in achieving its priorities.

The PPECB is also committed to continuously improving customer service by becoming more efficient and customer centred. For this reason, strategic programmes have been consolidated and aligned to direct organisational focus accordingly.

ORGANISATIONALPERFORMANCE

PROGRAMME: STATUTORY OPERATIONS COASTAL 95

PROGRAMME: STATUTORY OPERATIONS NORTH 96

PROGRAMME: STATUTORY OPERATIONS SOUTH 97

PROGRAMME: HARMONISATION 99

PROGRAMME: HUMAN RESOURCES 101

PROGRAMME: LABORATORY 102

PROGRAMME: FINANCE 103

PROGRAMME: DEVELOPMENT 104

PROGRAMME: ICT MOBILE TECHNOLOGY 105

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Programme: Statutory Operations Coastal

Sub-programme Output Indicator Target Actual Comments

Ensuring compliance with all relevant legislation that affects the PPECB and its operational mandate in particular

Deliver on Agricultural Product Standards Act (APS) statutory mandate

Number of consignment notes inspected based on a 2% inspection sample

100% 100%

Deliver on Cold Chain statutory mandate

Number of accurate temperatures expressed as a % of total letters issued

100% 100%

Ensure compliance to overtime (o/t) legal requirements

Average number of weekly overtime exceedances against the 15 hour legal requirements

5 3Good o/t management including the implementation of a 7-day work week in Durban for contract staff

Building capacity to achieve a workforce that is multi-skilled, innovative, competent, consistent and uniform in its inspection activities

Multi-skilled staff

Number of inspectors that are multi-skilled in at least 5 products

20 17

Focus was on newly appointed staff on citrus and grapes competency. Due to inexperience levels competence was more difficult to achieve

Cumulative number of employees skilled in Occupational Health and Safety (OHS) disciplines

20 21Number due to priority being given to high risk areas especially Durban and Cape Town

Cumulative number of inspectors skilled in minor product inspections

9 5 Focus was given to major products

Cumulative number of assessors skilled in cold treatment disciplines

6 23Cold treatment was accelerated due to stakeholder and market demands. 2-year contract staff trained and evaluated

Transforming efforts in the cold chain environment to ensure mandate requirements and stakeholder expectations are met

All container loading control documents captured within 24 hours of receipt

Number of control documents captured within 24 hours expressed as a % of total control documents received

100% 84%Challenges were experienced within the booking process and inland container loading

Containers fully monitored during loading process

Number of containers fully monitored expressed as a % of total containers loaded

80% 83%Increase in permanent and contract staff to manage the risk

Prioritising people not only in line with the PPECB's values, but also because without a team effort, the desired results cannot be achieved

Temporary staff positions converted to permanent

Cumulative number of positions converted from temporary to permanent

4 4Qualifying contract positions converted to permanent

Providing stakeholders with information that is complete, accurate, reliable and on time

Accurate and timely information

Reported information as per Service Level Agreement (SLA)

Wk 1 93%

Wk 2 99%

Wk 1 89%

Wk 2 98%

Not met due to capturing challenges

Capturing of inspection information for fruit products within 72 hours after inspection date

75% 86%Higher due to more efficient processes introduced.

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Programme: Statutory Operations North

Sub-programme Output Indicator Target Actual Comments

APS Inspection Services

Deliver on APS Act statutory mandate

Number of consignment notes inspected based on a 2% inspection sample 98% 98%

Multi-skilled staff

Number of inspectors that are multi-skilled in at least 5 products 4 15

Increased focus due to regional need

Number of inspectors competent on container loading for the inland region 12 12

The PPECB's Cold Chain Services

Accurate temperature letters

Number of accurate temperatures expressed as a % of total letters issued 100% 100%

ManagementAccurate and timely information

Reported information in line with specific SLA 85% 93%

Capturing of inspection information for fruit products within 72 hours after inspection date 75% 85%

% batches approved and posted after capturing within 24 hours 50% 96%

Better than anticipated due to more efficient processes introduced

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Programme: Statutory Operations South

Sub-programme Output Indicator Target Actual Comments

Ensure mandate compliance with all relevant legislation that impacts on the PPECB and its mandate

All fruit types inspections based on a 2% sample

Number of consignment notes inspected based on a 2% inspection sample

94% 95%2% and what is drawn by clients added together

Increased effectiveness of oversight

Strengthen oversight in the cold chain and inspection services through depot audits

35 115

Citrusdal: 47; Grabouw: 7; Robertson: 12; Ceres: 26; Paarl: 23

Smooth integration from inland cold chain services in the south region

All Q08s (Control List for Containerisation Form) captured within 24 hours of receipt

80% 78%At time of capturing the booking was not yet on the system

Containers fully monitored during loading process 90% 93%

Citrusdal: 92%; Grabouw: 90%; Robertson: 94%; Ceres: 93%; Paarl: 94%

Compliance to food safety requirements

Number of Food Business Operator (FBO) exceptions reported 20 11

Citrusdal: 0; Grabouw: 5; Robertson: 0; Ceres: 3; Paarl: 3;

Reason: 10 Incorrect capturing of FBO codes and 1 dispensation

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Programme: Statutory Operations South

Sub-programme Output Indicator Target Actual Comments

Building capacity to achieve a competent, multi-skilled and innovative workforce

Multi- skilled staff

Cumulative number of inspectors and assessors skilled in food safety 10 12

Citrusdal: 3; Grabouw: 2; Robertson: 1; Ceres: 3; Paarl: 3

Cumulative number of inspectors and assessors skilled in OHS 8 12

Citrusdal: 3; Grabouw: 3; Robertson: 1; Ceres: 3; Paarl: 2

Cumulative number of inspectors multi-skilled in at least 5 products 42 46

Citrusdal: 5; Grabouw: 13; Robertson: 7; Ceres: 9; Paarl: 12

Cumulative number of inspectors competent on container loading for the inland region

15 21

Citrusdal: 7; Grabouw: 4; Robertson: 4; Ceres: 3; Paarl: 3

Capacity on all minor products exported from the south region 8 13

Citrusdal: 1; Grabouw: 0; Robertson :3; Ceres: 2; Paarl: 7

Number of unemployed graduates trained per product 10 11

Citrusdal: 8; Grabouw: 0; Robertson: 0; Ceres: 2; Paarl: 1

Providing stakeholders with information that is accurate and on time

Increase of 5% against SLA targets

Reported information as per SLA

Wk 1 90%

Wk 2 95%

Wk 1 89%

Wk 2 98%

Average for target is 92.5%

Average for actual is 93.5%

Capturing of inspection information for fruit products within 72 hours after inspection date

75% 82%Target is measured over 5 working days

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Programme: Harmonisation

Sub-programme Output Indicator Target Actual Comments

Consistent application of standards

Annual cumulative harmonisation skills transfer interventions undertaken

5 6

Refrigerated Road Motor Transport (RRMT) Accelerated Skills Transfer Intervention (ASTI) Pome ASTI; Citrus ASTI: (Port Elizabeth); Stone ASTI; Table grapes ASTI; Citrus ASTI

Number of harmonisation manuals developed 8 11

Maximum Residue Limit (MRL); Citrus Black Spot (CBS) and False Codling Moth (FCM) Special Market Manual; Normal container loading and RRMT offloading; Stone; Pome; Citrus; Table grapes; Avocado; Wheat; Lucerne; Hay

Number of consistency reports (status of inspectorate)

6 10

1 Pome fruit; 1 Citrus; 1 Avocado; 1 Grain; 1 Cold chain - Containers Grapes (Lower Orange River Cold Chain - 6 Disciplines Table grapes Berg River; Stone fruit; Litchis

Delivery on PPEC statutory mandate

Annual depot and port audits undertaken 20 38 Port audits increased due to CBS.

Competent staff% competence of inspectors and assessors 80% 93%

3-year cycle Product inspections: 94% Cold chain functions: 89%

Uniformity of technical personnel

% of inspectors with uniform approach 90% 93% Seasonal (inspection)

% of assessors with uniform approach 85% 98% Annual (cold chain)

Standards development and market access

Number of Department of Agriculture, Forestry and Fisheries (DAFF)/ Industry harmonisation sessions

2 2

Citrus harmonisation cold chain standards working group workshop (CCSWG). DAFF included in Technical Expert Seminar - CBS and special markets harmonisation

Number of external technical policy meetings attended

5 11Higher than planned due to increased focus on CBS, Market access, Groundnuts and Macadamias

Number of international harmonisation meetings attended

2 2

United Nations Economic Commission for Europe (UNECE) specialised section meeting.

Organisation for Economic Co-operation and Development (OECD) meetings;

UNECE working party meeting;

BONN meeting; OECD working group

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Programme: Harmonisation

Sub-programme Output Indicator Target Actual Comments

Standardised training methodologies

Training manuals developed 1 2 More due to business need

Training DVD's 1 1 Container inspection professional video.

Train-the-trainer workshops 1 2

Training methodology standardisation brainstorming workshop

Cold chain standardised training methodology follow-up workshop

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Programme: Human Resources

Sub-programme Output Indicator Target Actual Comments

Strategy awareness

Number of employees attended awareness sessions 364 442

More sessions held than planned which led to the opportunity for more people to attend

Number of training and development delegates aligned to employment equity (EE) targets

298 378More attendees as sessions were held over relief duty periods resulting in an increased attendance

Number of EE monitoring meetings 4 3

An EE and skills forum was established for the PPECB. The first quarterly sessions took place in Dec. 2014 (Day 1 training and Day 2 consultation on annual EE report and skills (study assistance) for 2015; 17 March 2015

Number of Agri Export Technologist Programme (AETP) students placed (feeder pool for career path)

50 44 Less due to resignations

Number of training curriculums developed 2 1 iThrive and supervisory programme

Number of training modules on E-learning 2 2

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Programme: Laboratory

Sub-programme Output Indicator Target Actual Comments

Reliable laboratory results

Map proficiency testing results as indicated by z-scores 37 21

Fewer tests conducted than initially planned

Number of peanut samples within the acceptable range as indicated by Food Analysis Performance Assessment Scheme (FAPAS) - DAFF oversight

4 3

DAFF sample analysed in Q3 failed - the matrix of the sample was not known at the time of analysis - later confirmed to be hazelnut and not peanut as per arrangement with DAFF, and therefore a matrix mismatch.

Increased scope

Number of newly ISO 17025 accredited scopes for standards and analytical services

4 4Patulin, fumonisons, pesticides in groundnuts, peanut butter and citrus developed and provided as accredited services

Amount of MRL Samples 150 6

Clients have requested an accredited service. Accreditation was recommended by South African National Accreditation System (SANAS) at the end of March 2015.

Increase effectivenessNumber of new SANAS declared technical signatories 3 3

Three technical signatories were deemed competent for pesticide residue testing

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Programme: Finance

Sub-programme Output Indicator Target Actual Comments

Accounts receivable

Maintain cash flowCollection of outstanding debt in days

55 days 41 daysThis is due to informing the Financial Manager or Chief Executive Officer prior to suspension

Maintain liquidityBad debt as a % of income 0.75% 0.4%

This is due to a stringent credit management approach

Accounts payable Payment of creditorsAverage days to pay creditors 30 days 26 days

A substantial amount of suppliers are paid within 10 days e.g. accommodation. All rentals need to be paid within 7 days. SLA's are in place with certain suppliers to pay before the 30-day period.

Procurement

Increase total spend on Broad-Based Black Economic Empowerment (B-BBEE) suppliers

% spend on B-BBEEE suppliers 75% 83%

The increase can be attributed to the application of Preferential Procurement Policy Framework Act (PPPFA) on low value transactions and the accelerated expenditure towards year-end

Lead time to conclude orders on average

Ensure that 95% of total orders placed are delivered within agreed time

95% 96%The improvement is as a result of constant follow up on orders placed and commitment of suppliers to the agreed lead times

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Programme: Development

Sub-programme Output Indicator Target Actual Comments

Increased product offering of development initiatives

Number of training products developed 4 4

Lesotho project - product manuals on peaches and 5 vegetables, Unifrutti Plums, Agricultural Research Council (ARC) - Groundnut food safety

Increase the number of Services Sector Education and Training (SETA)-accredited workshops

Number of new SETA-accredited training programmes developed

2 0 No need for additional accreditation

External capacity buildingNumber of smallholder farmers developed in market access (local and export)

120 175

Food safety, Good Agricultural Practices (GAP) and responsible use of pesticides workshops in preparation for Food Safety Certification

Raise external donor funding

Rand amount of external donor funds raised R2M R2.6M

Income invoiced for financial year.

In addition there is a R2.5M extension to the DAFF contract to 2020.

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Programme: ICT Mobile Technology

Sub-programme Output Indicator Target Actual Comments

ICT infrastructure maintenance and management

Access to Information Technology (IT)

Number of incidences with more than 4 hours network downtime

4 incidences less than 4 hours

downtime

2 Eskom power outages due to load shedding

Access to mobile technology - Project Titan and other projects supporting employees

Number of tablets issued to Project Titan team, inspectors, and General Management Committee (GENCO).

240 309More tablets issued due to an increase in demand for tablet inspections.

Sufficient IT infrastructure

Number of offices with access to wireless technology (WiFi)

9 17

Grabouw, Montague Gardens, Ceres, Nelspruit, Durban, Gauteng, Paarl, Port Elizabeth, Citrusdal, Tzaneen, Pretoria Laboratory, Cape Town Airport, Hex River, Robertson, OR Tambo, Durban, Head Office

Efficient utilisation of IT equipment

Number of people trained on the use of mobile (Project Titan) and other (Technical Team) devices

100 219Due to more tablets being issued more training sessions were held

Develop and annually update the Information and Communications Technology (ICT) operational plans (including infrastructure and tactical plans) ensuring they are relevant

Operational plans updated annually (this will be done through ICT strategic workshops, and consultation with business)

3 2The last ICT strategic planning session was held in February 2015

Ensure that all ICT policies and procedures are updated/ reviewed as required or annually, to reflect changes in business

Update of ICT policies and procedures every quarter

8 10Policies updated to accommodate the use of tablet technology

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Programme: ICT Mobile Technology

Sub-programme Output Indicator Target Actual Comments

Staff development and customer service excellence

Ensure there is accelerated skills transfer intervention each year for ICT staff

Development of the skills transfer plan (1) and technical documentation (4) management for ICT service providers and staff annually

5 1 Development still in progress

Ensure ICT staff members attend three technical training sessions each per annum, and there is a clear capacity building plan for technical and people skills

Develop the technical skills plan (1) for ICT staff members

3 per staff member 10

Due to additional staff being appointed more training was attended

Visit at least 10 regional offices annually (customers (5)/ (2), stakeholders (5)/ (2) and PPECB offices (10)/ (2).

Development and implementation of a detailed ICT customer service plan (1) with the road trip plan (1) for the visits for all staff members

20 visits for General Manager,

and 6 visits per staff member

15 visits for GM

Less visits due to budgetary constraints

Projects delivery, monitoring and measurement

Ensure that projects are delivered within the budget and time frames as specified in the signed off project plan and success criteria (90% achievement according to agreed budget and time frames)

Develop a project tracking and project dashboard for project progress reporting and measurement (Reports include sign-off, success criteria, actual vs budget and time)

12 12

Deliver infrastructure projects as agreed and based on the project plan for the mobile technology on time, within budget and with required quality

Implementation of Project Titan, in October 2014. Gradual increase of the implementation sites for Project Titan.

4 Pome & Stone and 10 Citrus

pack houses

39 34 Pome and Stone and 4 Citrus pack houses